The US dollar index, which measures the greenback's performance against a basket of six major currencies, rests today following its best weekly performance since August. The greenback retreated from Friday's high to swing at 95.10 in the early hours of Monday, owing it to a weaker yield note. The Biden Infrastructure bill demonstrated a robust labour market rebound, which supported the dollar index. The US 10-year Treasury yield began the week defensively at 1.56 percent, down 1.6 basis points, following Friday's release of a weaker consumer sentiment index, which fell to a ten-year low of 66.8. The lower yield note contributed to the USD's recent slide, encouraging profit-taking and heightening expectations for an easy government policy even during periods of rising inflation. The S&P 500 futures climbed 0.2 percent in today's intraday session against this backdrop. U.S. policymakers are progressing with stimulus talks, but no concrete announcements have been made yet.
- On Tuesday 11/16: Industrial Production ¦ Import Price Index ¦ Export Price Index ¦ Capacity Utilization ¦ Business Inventories
- On Wednesday 11/17: Retail Sales ¦ Building Permits ¦ Housing Starts
- On Thursday 11/18: Continuing Jobless Claims ¦ Philadelphia Fed Manufacturing Survey ¦ Initial Jobless Claims
The EUR/USD pair hit a new 16-month low today, before bouncing back to about 1.144. The market's positive mood is bolstered by conflicting concerns about US stimulus, inflation rates, and a low consumer sentiment index. The currency pair's outlook remains susceptible due to the continued purchase of the greenback, and it is mostly expected to track the dollar's movements. The European Central Bank playmakers' comments about the bank's low inflation performance in comparison to its 2023 inflation targets encouraged the currency rebound. On a macro level, investors are cautious when it comes to the EUR due to growing economic concerns. Additionally, the Eurozone is expected to demonstrate high sensitivity towards the negative impact of energy price and a slower pace in China's real estate market, as well as a sharp increase in Covid-9 cases across various Eurozone countries. Among these challenges, the ECB is expected to push back rate hike projections and sustain its dovish stance.
- On Monday 11/15: Trade Balance
- On Tuesday 11/16: Employment Change ¦ Gross Domestic Product ¦ Employment Change
- On Wednesday 11/17: EU Financial Stability Review ¦ Construction Output
- On Thursday 11/18: Consumer Price Index
- On Friday 11/19: Current Account
The Pound Sterling edged higher against the greenback in the early hours of Monday, keeping momentum near the 1.34 level, followed by a recovery move from Friday's 1.335 level. The gain was aided by the dollar's retreat from a 16-month high, precipitated by weaker-than-expected US consumer confidence data. Investors have been unable to profit from Sterling's upswing due to concerns that the UK government may use Article 16 of the Northern Ireland treaty. Additionally, the decline has been cushioned by the anticipation of new economic data on inflation and employment. Strong data combined with a low US treasury yield may influence the USD and provide the GBP/USD currency pair with a short-term positive moment.
- On Tuesday 11/16: Claimant Count Rate ¦ ILO Unemployment Rate ¦ Average Earnings including Bonus/excluding bonus
- On Wednesday 11/17: Consumer Price Index ¦ Retail Price Index ¦ PPI Core Output ¦ Core Consumer Price Index ¦ Producer Price Index
- On Friday 11/19: GfK Consumer Confidence ¦ Retail Sales ex-fuel ¦ Retail Sales ¦ Public Sector Net Borrowings
On the opening day of the new week, the USD/JPY pair lacked direction, seesawing between tiny gains and losses below the 114.00 level. A slew of economic variables conspired against the currency pair, gaining considerable momentum. The cautious atmosphere in the equity markets bolstered support, but poor GDP data-limited investors' willingness to make positive bets. According to reports, the economy contracted more than predicted in September by 0.8 percent, as well as by 0.3 percent yearly. Additionally, the governor of the Bank of Japan has chosen not to loosen monetary policy even when the CPI reaches 1% next year. Market players are anticipating the U.S. economic calendar, which will include the release of the empire state manufacturing index. Traders will use market sentiment to identify short-term trading opportunities in the USD/JPY pair.
- On Monday 11/15: Gross Domestic Product ¦ Industrial Production ¦ Capacity Utilization ¦ Industrial Production
- On Tuesday 11/16: Tertiary Industry Index
- On Wednesday 11/17: Machinery Orders
- On Friday 11/19: National Consumer Price Index ex-food, energy ¦ National Consumer Price Index ¦ Adjusted Merchandise Trade Balance ¦ Imports ¦ Exports
The Loonie remains subdued against the greenback amid a weaker dollar struggling to find demand from easing U.S. Treasury Yields and a broader cautious optimism underpinning riskier assets. However, the risk sentiment has failed to ignite any significant price action on Crude oil prices, with the West Texas intermediate changing hands at USD 80.10, lingering around the same levels as when they closed the previous week. Following last week’s surge in U.S. inflation readings, market participants will stay tuned to the upcoming inflation reading in Canada, expected to be released on Wednesday. Headline inflation figures will be released by Statistics Canada, while the Bank of Canada will be responsible for the release of the Core reading used to assess the inflationary pressures by policymakers. Additionally, the week will close with Retail Sales readings from September, which might bring renewed impetus to markets.
- On Tuesday 11/16: Housing Starts ¦ Manufacturing Sales
- On Wednesday 11/17: BoC Consumer Price Index ¦ Consumer Price Index
- On Thursday 11/18: Wholesale Sales ¦ ADP Employment Change ¦ Employment Insurance Beneficiaries ¦ New Housing Price Index
- On Friday 11/19: Retail Sales
The Mexican Peso kicked off the week on a quiet note, remaining pretty much unchanged during the early hours of the trading session amid cautious optimism amongst market participants. However, the sentiment sustains woes from the emerging market amid softer commodity prices slow down the growth pace. This affected the judgment of policymakers, which surprised with last week’s interest rate decision, hiking the benchmark rate by 25 bps to 5%. Although this met the expectations of the majority of analysts, there were disappointed traders expecting a 50 bps hike. Today, Mexican liquidity will remain thin, amid the Celebration of Revolution Day in the country.
- On Monday 11/15: Revolution Day
The Chinese Yuan closed out last week with strong momentum amid the latest outbreak of Covid-19 in the country and the conclusion of the Sixth Plenum of the Chinese Communist Party. Nearly 350 members and alternate members of the CCP Central Committee gathered in Beijing last week to review the Resolution of Major Achievements and Historical experience, elevating Xi Jinping to the level of Mao Zedong and Deng Xiaoping, which have been the only party members that have acted in such historical resolutions, although their agenda points remain unchanged in the bigger scheme of things.
- On Monday 11/15: House Price Index ¦ Fixed Assets Investments ¦ NBS Press Conference ¦ Industrial Production ¦ Retail Sales
The Brazilian Real snapped 5 consecutive days recording gains against the dollar on Friday’s trading session. The Real built strong momentum following the aggressive tightening cycle the Brazil Central bank triggered amid the spike in inflation hitting double digits. The latest rate hike of 150 bps pushed the Selic rate to 7.75% and policymakers remain confident that with the information they hold today, another 150 bps hike pace still seems appropriate, and they expect to close out the yearly inflation at 9.25%. However, worries around the fiscal stability of the country weigh on the Brazilian currency and its concerns around the impacts of inflation itself.
- On Monday 11/15: Republic Day
- On Saturday 11/20: Zumbi dos Palmares