The International Monetary Fund is expected to predict steady global growth and ongoing disinflation in its upcoming World Economic Outlook, Managing Director Kristalina Georgieva has said. The US economy is performing better than expected, although uncertainty around US President-elect Donald Trump's trade policies remains a concern, Georgieva added.
UK Chancellor Rachel Reeves has committed to meeting fiscal rules despite rising borrowing costs, which have reached their highest level since 2008. Speaking during a trip to Beijing, Reeves said deeper spending cuts might be necessary, but ruled out further tax increases.
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China has intensified efforts to stabilize the yuan, which is near a record low against the US dollar, by adjusting capital controls and pledging to crack down on market disruption. The People's Bank of China has allowed more overseas borrowing and issued a stronger-than-expected daily reference rate.
Options traders are preparing for the pound to drop as much as 8% amid fiscal concerns and market volatility, with some positioning for a fall to below $1.12. The pound was the weakest among developed-nation currencies last week, driven by concerns about US policies, inflation, and UK government borrowing levels.
Chinese corporate profits are projected to decline for the third consecutive year, with a 4.7% decrease reported from January to November 2024. State-owned enterprises have been the worst performers, experiencing an 8.4% profit decline.
The South Korean won has hit its lowest level since 2009, driven by political instability and slowing economic growth. Analysts from Malayan Banking and Mizuho Securities predict the currency could dip further to the key test level of 1,500 per dollar.
Emerging-market central banks are actively intervening in markets to support their currencies amid fiscal challenges and speculative pressures. The People's Bank of China is using tools such as daily reference rates and bill sales in Hong Kong to stabilize the yuan, while Latin American central banks are taking measures such as refinancing debt and historic interventions, as the US dollar surges.
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Outgoing US Securities and Exchange Commission Chair Gary Gensler has advised the next administration to maintain investor protections, warning that broadening the definition of accredited investors or reducing disclosure requirements could harm retail traders. "Investors get to decide what risks to take as long as the issuers have been putting out full and fair, truthful disclosures," Gensler said.
The International Organization of Securities Commissions has released draft recommendations on pre-hedging that largely mirror existing industry codes, such as the FX Global Code and the Financial Markets Standards Board guidelines. The draft suggests dealers pre-hedge only for genuine risk management, act fairly toward clients and minimize market impact.
