Yellen's Warning on Currency Manipulation, Trump-Era Expectations, and Japan's Rate Comments: What's Happening in Global Markets?

Global economic developments continue to show significant changes across a wide range, from the monetary policies of the U.S. and Japan to inflation figures in Latin America. Strong reactions against currency manipulation from U.S. Treasury Secretary Janet Yellen and economic expectations related to the Trump era from the CEO of Bank of America are attracting attention, while comments on Japan's interest rate policy and Brazil's Central Bank's interest rate decision are on the market's agenda. Argentina continues to struggle with high inflation rates.

Yellen's Statement on Currency Manipulation U.S. Treasury Secretary Janet Yellen stated that the U.S. will respond strongly if countries attempt to manipulate their currencies to gain a competitive advantage. Adding that there is currently no such intervention, Yellen emphasized that there is no threat to the dollar's status as a reserve currency, as no other currency can compete with the dollar in financial markets and trade. Yellen also expressed that the Biden administration believes the best approach is for the dollar's value to be determined by the market. These comments came in response to questions regarding the potential for the Trump administration to weaken the dollar using a version of the 1985 Plaza Accord.

Stock Markets Have Optimistic Outlook for Trump Era Bank of America CEO Brian Moynihan predicted that changes in regulations during Donald Trump's presidency would support mergers and acquisitions, including those of banks. Moynihan noted that there is increasing activity in the stock markets, which would boost initial public offerings (IPOs). These remarks were made at the Goldman Sachs Financial Services Conference during a talk to investors. Regulatory changes are expected to enable the facilitation of deals.

Japan's Central Bank Interest Rate Decision Expected Goldman Sachs forecasts that the Bank of Japan (BOJ) will keep its interest rate at 0.25% at its monetary policy meeting. The bank expects a rate hike in January 2025, but it indicates that this increase might not be the last move in the cycle. Currency strategists highlight that the BOJ’s decision to refrain from changing interest rates until March could pose risks for the yen. They mention that if the BOJ delays raising rates, changes in exchange rates are likely.

Interest and Inflation Data in Brazil and Argentina The Central Bank of Brazil raised interest rates by more than expected, by 100 basis points. The bank indicated that similar increases might occur in future meetings, demonstrating its determination to combat inflation. This move aims to have an impact on Brazil's real currency and inflation expectations. In Argentina, the monthly inflation rate was 2.4% in November. Annual inflation was recorded at 166%, slightly below expert forecasts, and this figure decreased from the previous month's level of 193%.