Dollar slips lower on renewed Fed rate cut expectations; euro up on Ukraine talks

This week marks a pivotal moment for the UK government as Chancellor Rachel Reeves prepares to unveil her budget, a critical event that could define her leadership and the Labour party's future. The discussions leading up to the budget have been intense, with significant implications for fiscal policy and economic management. Behind the scenes, Kiran Stacey shares insights from his recent trip to Johannesburg with Keir Starmer, including talks on the Ukraine peace plan.

US equity futures have risen as traders anticipate a potential rate cut in December, coinciding with positive signals from US State Secretary Marco Rubio and Ukrainian officials regarding progress in peace talks aimed at resolving the ongoing conflict in Ukraine. Meanwhile, BHP has once again walked away from its takeover bid for Anglo American after a new approach was rejected.

Investors are increasingly purchasing eastern European assets as US-led negotiations aimed at resolving the ongoing conflict in Ukraine provide renewed optimism for a peaceful resolution. This shift has positively impacted the currencies of Eastern European nations, reflecting a growing confidence in the region's economic stability.

European stocks remained steady, recovering from losses primarily caused by a significant drop in Novo Nordisk A/S shares following the failure of its Ozempic pill in Alzheimer's trials. Investors are also closely monitoring potential peace negotiations between Ukraine and Russia, which could impact market dynamics.

Oil prices have continued to decline, marking the largest weekly loss since early October, as traders assess the potential for a peace deal between Ukraine and Russia that could increase crude oil supplies in an already saturated market. This drop reflects ongoing market uncertainty regarding geopolitical tensions and their impact on oil prices.

A top economist has warned that the ongoing affordability crisis will persist as tariffs and a crackdown on immigration contribute to rising inflation, which is currently near 3%, exceeding the Federal Reserve's target. This situation indicates a troubling economic outlook, with expectations of further inflationary pressures ahead.

Finnish President Alexander Stubb, alongside Italian leader Giorgia Meloni, has engaged in discussions with former US President Donald Trump regarding a 28-point peace plan aimed at resolving the ongoing conflict in Ukraine. Stubb, who has a favorable rapport with Trump, refrained from disclosing specific details about their conversation during an interview at the Group of 20 leaders meeting in Johannesburg. He emphasized the need for patience in peace negotiations and noted that European nations were not previously informed of Trump's proposal.

An overnight drone strike at the Shatura power plant, which supplies Moscow, resulted in a significant fire, highlighting the ongoing escalation of attacks on energy infrastructure amid the conflict between Russia and Ukraine. This incident coincides with a peace plan being advocated by the Trump administration.