Forex Weekly Outlook: November 28 to December 2


On Friday, the greenback dropped against a currency basket in holiday thinned trade, as investors took gains after a powerful rally that push the U.S. currency to approximately 14 year peak.

The U.S. dollar index , which gauges the greenback’s strong point against a trade influenced basket of six major currencies, declined 0.28% at 101.48 late Friday.

On Thursday, U.S. markets were closed  for the Thanksgiving holiday and Friday was a half-day session.

On Thursday,  the index surged to highs of 102.07, a level not met since April 2003.

The index has increased approximately  6% in the last two months during expectations that increased fiscal spending and tax reductions  under the Trump administration will spur economic development and inflation.

The greenback  has also increased by the view that a rate hike by the Federal Reserve in December is a near certainty.

According to the reports, odds of a rate hike at the Fed’s December 13-14 meeting are at 95.4 percent.

Expectations for higher interest rates normally increase the greenback  by making it more attractive to yield seeking investors.

The greenback  eased against the yen, with USD/JPY drops 0.12% to 113.22, not far from the eight-month peak of 113.88 hit earlier. For the week, the pair increased 2.06 percent.

The euro pressed higher, with EUR/USD increases 0.31% to 1.0586 late Friday after declining to lows of 1.0517 on Thursday, the weakest level since December 2015.

The dollar declined 0.27% against the Swiss franc and 0.22% against the pound.

In the week onward, markets will be giving more attention to Friday’s U.S. nonfarm payrolls report for November along with data on U.S. economic development and manufacturing for fresh signals on the possibility of a December rate hike.

Investors will also be observing euro zone inflation data and manufacturing reports out of the U.K. and China.

On Additional News

On  November 28, European Central Bank President Mario Draghi is scheduled to testify about the ECB’s position on economic and monetary developments and the consequences of Brexit to the Economic Committee in the European Parliament.

On  November 29, Japan is releasing statistics on household spending. Bank of Canada Governor Stephen Poloz is to speak at an occasion in Toronto. Germany is to release initial data on consumer price inflation.The U.S. is to make revised data on 3rd quarter GDP and a report on consumer confidence.  New York Fed President William Dudley is to speak at an event in Puerto Rico.

On November 30, the Organization of the Petroleum Exporting Countries is scheduled to have a meeting in Vienna intended at finalizing the details of a proposed output reduction.

Australia is scheduled to release data on building approvals. Germany is to report on retail sales and adjust the number of people without a job.

The euro zone is scheduled to release an initial estimate of consumer price inflation.

Mario Draghi, ECB head is to talk at an event in Madrid.

On  December 1,  Australia is to release records on private capital expenditure.

China is to release its official manufacturing and services PMI’s, together with the Caixin manufacturing PMI.

On December 2,  Australia is to produce data on retail sales.

The U.K. is to announce its construction PMI.  Canada is to issue its employment report for November.  The U.S. is to review the week with the non-farm payrolls report for November.

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