Eurozone inflation ticked up to 2.2% in November—slightly above the ECB’s target—driven mainly by rising service prices, while unemployment held steady at 6.4%. Despite this, the ECB is expected to keep its key rate at 2% for the foreseeable future, with policymakers confident that slower wage growth will eventually bring inflation back below target. The OECD projects modest eurozone growth through 2027, though one European bank offers a more optimistic outlook, citing potential fiscal stimulus in Germany and forecasting a stronger euro, albeit with limited upside due to continued support for the U.S. dollar. On the geopolitical front, tensions remain high as the U.S. envoy visits Moscow amid disputed Russian claims of capturing Pokrovsk—developments that could strengthen Russia’s leverage in peace negotiations if confirmed.

Japan’s recent political and economic signals point to a cautiously improving outlook, but with plenty of caveats. Finance Minister Satsuki Katayama’s comments suggest the government is comfortable with a near-term BOJ rate hike as the weak yen fuels inflation, though any tightening beyond December remains doubtful given BOJ caution and the government’s expansionary fiscal stance. While global FX remains driven by expectations of future Fed cuts—tilting medium-term sentiment toward a stronger yen—Japan still faces external risks from U.S. tariffs and strained China relations, which could dent growth. Domestically, the government’s new “DOGE-style” efficiency office looks more symbolic than transformative, arriving alongside a massive stimulus that likely outweighs any savings. Still, fresh data—from rising consumer confidence to resilient services-led PMI readings—shows gradual economic recovery and supports the BOJ’s slow, measured path toward policy normalization.

Recent data suggest Australia may be entering a cyclical upswing, supporting the RBA’s decision to stay on hold, and prompting some analysts to expect rate hikes in 2026. That outlook, combined with already high yields, positions the AUD as one of the most attractive G10 currencies. Still, capacity constraints, stagnant productivity, and soft 3Q GDP figures show the economy isn’t overheating, keeping the RBA cautious for now. Stable real incomes, rising household savings, and expected AUKUS-driven investment offer medium-term support, while China’s slowdown poses risks—though potential stimulus from Beijing could lift sentiment and provide an additional boost to the Aussie.