The US dollar saw its worst weekly decline since May, with negative momentum predominating. Next week will be shorter in the United States due to Thanksgiving. We will report on preliminary PMIs for November.
Here’s what you need to know for next week:
He Dollar Index (DXY) recorded a loss of 1.65% during the week, which is its worst result since July. The data showed a further moderation in inflation, which weighed on the dollar by reinforcing the market’s belief that the Federal Reserve is done raising interest rates.
US Treasury yields fell, putting additional pressure on the Dollar. Meanwhile, risk appetite prevailed, propelling Wall Street to its third consecutive weekly rise and reaching its highest level in eight weeks.
The Federal Reserve (Fed) will release the minutes of its latest meeting on Wednesday, but it could easily be a non-event given the latest economic reports and comments from Fed Chair Jerome Powell.
Wednesday will be a busy day with many important reports ahead of the Thanksgiving holiday: weekly jobless claims, durable goods orders and consumer sentiment from the University of Michigan (final reading).
Near-term momentum for the US Dollar remains firmly tilted to the downside. However, fundamental data indicate that US economic growth is above trend, while the Eurozone is heading towards or already in a recession. This divergence suggests that the fall of the Dollar may not be free of the risk of sharp corrections.
The EUR/USD pair has broken above 1.0750 and has broken above the 20-day SMA, suggesting further upside. The 1.10 level is not far away. On Monday, Germany will publish the Producer Price Index (PPI) for October. Preliminary manufacturing PMI data for November in the Eurozone will be published on Thursday. In addition, the European Central Bank (ECB) will publish the minutes of its latest meetings.
ING analysts on Eurozone PMIs:
PMIs have also been quite weak. We do not expect any significant rebound for November, as the economy is suffering from weak consumption, the slowdown in investment and the sluggishness of foreign demand at the moment. For now, our baseline scenario is a modest negative GDP growth rate for the fourth quarter.
GBP/USD resumed its bullish path, reaching 1.2500 before losing strength. The short-term outlook is bullish, but the pound remains a laggard. Hearings on the Monetary Policy Report will take place on Wednesday, in which the Governor of the Bank of England and members of the Monetary Policy Committee will testify about inflation and the economy before Parliament’s Treasury Committee. On Thursday, the British Government will present its Autumn Statement in the House of Commons.
The USD/JPY pair recorded the largest weekly loss since July, against a backdrop of dollar weakness and declining Treasury yields. However, the yen hit new cycle lows against other currencies amid risk appetite. USD/JPY looks set to extend the correction after a double top near 152.00. The national Consumer Price Index will be published on Friday.
The AUD/USD pair It reached monthly highs above the crucial resistance of 0.6520, but failed to hold above. Risks appear to be tilted to the upside, but the Australian dollar has so far remained within the recent range. Reserve Bank of Australia (RBA) Governor Michele Bullock will deliver a speech on Tuesday, a day before the publication of the RBA’s accounts from the last meeting at which the central bank raised the official Cash Rate ( OCR) in 25 basis points. Bullock will speak again on Wednesday.
The NZD/USD pair retested the 0.6050 zone and retreated below 0.6000, ending below the 20-week SMA, hovering around 0.5980, suggesting that the pair is not yet ready for further upside. Breaking above 0.6050 would likely trigger a bullish acceleration. On Friday, New Zealand will report third quarter retail sales.
USD/CAD continues to move in a range between 1.3870 and 1.3630. The area near 1.3900 remains a crucial barrier that, if broken, could propel the pair to further rises. While a decline to 1.3545 (20-week SMA) looks likely if it breaks 1.3630. Canada will release the Consumer Price Index for October on Tuesday and retail sales data on Friday.
After falling for two weeks, Gold rebounded strongly, driven by declining US yields. XAU/USD approached $2,000, but failed to regain that area. The risk seems to be tilted to the upside. Silver had its best week in months, rising from $22.40 to $24.15, but returned below $24.00 on Friday.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
