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MARKET DEVELOPMENT – EUR and GBP Weakness Spurs USD Demand

USD: The US Dollar is firmer against its major counterparts, up 0.25% as month-end and Fed QT underpin. Given the light economic calendar for today’s session eyes will be on the G20 summit over the weekend with much of the focus on the outcome from the President Trump and Xi meeting. Risk assets were given a slight boost after Trade Representative Lighthizer saw no reason why the meeting would not be a success.

EUR: Given yesterday’s drop in German inflation, risks had been tilted to the downside for today’s Eurozone inflation figures, which confirmed as much. The headline figure fell 0.2ppts to 2%, while the core reading fell below expectations to 1.0%. Expectations of a “vigorous” pick up in core inflation voiced by ECB President Draghi back in September is still yet to be seen and given the sizeable drop in oil prices over the past 2-months, the inflation outlook has deteriorated. Consequently, the Euro has once again failed at the 1.14 hurdle, support at 1.1355-60 holding for now.

CAD: The Canadian Dollar briefly fell below 1.33 against the greenback after a relatively tepid GDP report. A quarterly rate of 0.5% dragged the annualised figure to 2.0% (in-line with forecasts), however, the monthly rate surprisingly dipped into negative territory, which in turn saw CAD on the backfoot.

EUR Falters at Resistance, USD in Demand - US Market Open

Data as of 1355GMT

DailyFX Economic Calendar: Friday, November 30, 2018 – North American Releases

EUR Falters at Resistance, USD in Demand - US Market Open

DailyFX Webinar Calendar: Friday, November 30, 2018

EUR Falters at Resistance, USD in Demand - US Market Open

IG CLIENT SENTIMENT Chart of the Day

EUR Falters at Resistance, USD in Demand - US Market Open

USDCAD: Data shows 32.6% of traders are net-long with the ratio of traders short to long at 2.07 to 1. In fact, traders have remained net-short since Oct 09 when USDCAD traded near 1.28217; price has moved 3.6% higher since then. The number of traders net-long is 14.3% lower than yesterday and 5.7% lower from last week, while the number of traders net-short is 15.6% lower than yesterday and 8.0% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDCAD trading bias.

Five Things Traders are Reading

  1. Charts for Next Week – AUD/USD, EUR/CAD, AUD/NZD, S&P 500 & More” by Paul Robinson, Market Analyst
  2. Brexit Impact on GBP: How the Pound Might Move After Parliamentary Voteby Martin Essex, MSTA , Analyst and Editor
  3. USD to Rise as Today Marks Another Fed Balance Sheet Unwind” by Justin McQueen, Market Analyst
  4. EURUSD Drops on Soft Inflation and Month-End” by Justin McQueen, Market Analyst
  5. Sterling (GBP) Range Bound, UK PM May’s Brexit Plan Continues to Unravel” by Nick Cawley, Market Analyst

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.comFollow Justin on Twitter @JMcQueenFX