U.S. dollar highlights:
USD is stable and gaining momentum ahead of the Thanksgiving holiday today. Market sentiment is currently pro-risk with global stocks higher and bonds lower. GDP for Q3 expanded 2.1% (versus 1.9% expected). Personal consumption continues to decline but inventories increase. Durable Goods Orders also increased 1.2% (versus -0.9% expected) to give USD more support. Jobless claims for last week was 213K (lower than expected 221K). Overall, the economy is improving, and a trade deal will reduce the chances of more monetary policy (as insurance). Markets are waiting for confirmation of phase one of the trade agreement (already priced in) and this has kept USD in a tight range the past week. China still wants the tariff issue resolved while their economy is affected by the trade war.
Canadian dollar highlights:
CAD gaining strength after OPEC is expected to extend production cuts during next week’s meeting. Oil prices increased and provided CAD with some support. Currently less than a 7% chance the Bank of Canada lowers interest rates next month and a 33% probability for January 2020. The trade impasse between China and U.S. is keeping CAD from strengthening more. Average weekly earnings for September available today (previously increased 2.9% in August). Markets will also focus on Q3 GDP tomorrow.
EUR weakness continues after European Central Bank official Philip Lane spoke about inflation increasing (after being below target for a year). German Consumer Prices available today will be closely monitored as the Eurozone’s largest economy narrowly avoided a recession last quarter. The central bank is expected to continue the asset purchase program and lower interest rates (due to slow growth). Unemployment Rate for October expecting to remain at 7.5% tomorrow (lowest since July 2008).
British pound highlights:
GBP defensive as the Conservative party’s lead over Labour is narrowing. After the Tories lost a majority in 2017, markets are hopeful Boris Johnson will prevail next month. A lead of 10% or more will give Johnson a majority and strengthen GBP; however, if the Labour party is within 8% or lower, the pound will suffer. The December 12 election is only two weeks from today.