Thanksgiving Week Offers Several Important Data amid Thin Liquidity
- US markets on holiday schedule Wednesday to Friday.
- Few important calendar releases – start on Tuesday.
- Little follow through expected this week.
Trading conditions around holidays tend to be less exciting as traders (literally) step away from their desks, taking their liquidity with them. While the Thanksgiving holiday this week will mainly impact US market participants, diminished participation rates across the globe are anticipated. Accordingly, the likelihood of a significant, lasting move in any given currency is unlikely.
Rate Hike Probabilities / Basis-Points Expectations
11/26 Tuesday // 15:00 GMT: USD Consumer Confidence (NOV)
Jobs data and consumption figures have held up better than expected in the wake of the US government shutdown, suggesting that the drop in confidence seen in October didn’t impact the economy as most feared. Accordingly, confirmation of the resiliency of the economy will be sought with a better than expected Consumer Confidence for November. Risks are thus asymmetrical to the US Dollar: a miss can be explained away thanks to the government shutdown; a beat will impress market participants. Given the projected impact on US yields, USDJPY and USDMXN are the pairs to watch for this data.
The key pairs to watch are EURUSD and USDJPY.
11/27Wednesday // 09:30 GMT: GBP Gross Domestic Product (3Q P)
The UK economy has shown surprising strength in recent months, with 3Q’13 data showing that the services sector grew at its fastest pace in 16 years. With inflation falling, the British Pound strengthening, the housing market expanding and the labor market besting expectations, there is risk for a beat here. Volatility should be expected regardless if the data hits or misses expectations; it could prove pivotal as the GBPUSD approaches September and October highs near $1.6260.
Survey: +0.8% (q/q), +1.5% (y/y)
Prior: +0.8% (q/q), +1.5% (y/y)
The key pairs to watch are EURGBP and GBPUSD.
11/28 Thursday // 08:55 GMT: EUR German Unemployment Change (NOV), CPI (NOV P)
The German CPI dipped into deflation territory on a monthly-basis in October (-0.2% m/m), and the ECB responded by cutting its main refinancing rate by 25-bps. Evidence that Europe’s largest economy is steadying and improving in the near-term will help the Euro recover some of the lost ground after the rate cut; and it is equally important to note that signs of further deterioration in Germany necessarily leave open the possibility for additional monetary easing in 2014. EURUSD and EURCHF are of interest, given how they reacted to the ECB rate cut.
Survey: 0K, 6.9% Unemployment Rate; CPI +0.1% (m/m), +1.2% (y/y)
Prior: +2K, 6.9% Unemployment Rate; CPI -0.2% (m/m), +1.2% (y/y)
The key pairs to watch are EURGBP and EURUSD.
11/28 Thursday // 23:30 GMT: JPY National Consumer Price Index (OCT)
Inflation has been increasing faster than economists have forecasted for Japan, but that’s done little to translate to broader economic growth. The upside price pressures seen by Japan in recent months are by and large aided by elevated oil costs, as Japan imports over 80% of its energy (Crude Oil priced in Yen terms is up +43.1% since the November 2012 low). Furthermore, increases in asset prices have yet to trickle down into wage growth, suggesting that consumption may be limited going forward (which will hurt CPI). Recent strength in CPI hasn’t spurred Yen strength; and anything short of expectations could send the JPY-crosses (GBPJPY, USDJPY, etc) higher into December.
Survey: +1.1% (y/y)
Prior: +1.1% (y/y)
The key pairs to watch are AUDJPY and USDJPY.
--- Written by Christopher Vecchio, Currency Analyst
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