The U.S. Dollar is trading in weaker ranges ahead of key inflationary data, dropping to its weakest levels overall since the end of October per the Bloomberg Dollar Spot Index
Additionally, markets are looking forward to next week in order to get some guidance and clarity from the Federal Reserve. It is basically guaranteed that the Fed will be cutting interest rates by 25 basis points, but with this very much priced-in, enthusiasm is wavering a bit across other market classes. Equities are muted while Gold gained.
Furthermore, Bitcoin dropped in value again after looking to be in recovery mode. Investors in general seem to be acting with some caution. It is important to note that the Personal Consumption Expenditures release later at 10AM will be from September so a surprise on the upside could add to arguments made by Fed Chairman Jerome Powell that prices remain too elevated to enact further expansionary policy. Our outlook for the month of December discusses the challenges inflationary pressures can put on officials.
Along with September data points, we will get the University of Michigan consumer Sentiment for December. There is supposed to be improvement so we shall see if anything too pessimistic turns on the Buck. Over the weekend, do not expect it to be quiet as negotiations over peace in Ukraine and other armed interventions can affect the mood for FX flows.
What to Watch This Week…
- Monex USA Online is always open
EUR ⇑
The Euro is not climbing mountains at the moment, but it is still holding on to gains with merit behind solid economic growth data. For now, the shared currency has been hovering around its best levels over USD since mid-October. The third reading of Q3 GDP came in slightly above estimate at 0.3% vs. 0.2%. Next week will be a bit quiet on releases until the week after when plenty of industrial and productivity gauges will come out ahead of the December 18th European Central Bank meeting.
CAD ⇑
The Canadian Dollar is improving and currently trading at the strongest levels over the Buck since the end of September. A surprise recently in Gross Domestic Product growth is now accompanied by shockingly good numbers in job creation. Net Change in Employment for November was forecast to be a contraction of around (-2.5K) jobs but instead came in with resounding addition of 53.6K. The Unemployment Rate, expected to be 7.0%, is now down to 6.5%. The Bank of Canada is now less likely to be loose-policy driven anymore and pause from borrowing costs reductions staring this coming meeting November 10th.
