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US Dollar May Rise on PCE Data, Thin Trade May Boost Volatility

US Dollar May Rise on PCE Data, Thin Trade May Boost Volatility

Ilya Spivak,

Talking Points:

  • US Dollar May Edge Higher as PCE Data Boosts December Rate Hike Bets
  • Kneejerk G10 FX Volatility May Be Amplified in Thinning Pre-Holiday Trade
  • Australian, NZ Dollars Rebound in Asia After Yesterday’s Underperformance

A quiet economic calendar in European trading hours is likely to put a busy US data docket in the spotlight. October’s Core PCE figures may prove most interesting. The Fed’s preferred measure of inflation is expected to put price growth at 1.4 percent, the highest in 10 months. That may help boost an interest rate hike at December’s FOMC meeting, which may offer a near-term boost to the US Dollar. Follow-through may be limited however considering traders already see the probability of a 25bps increase at 77.5 percent (according what is priced into Fed Funds futures), the highest yet this year.

Traders would be wise to keep in mind that liquidity is likely starting to drain ahead of the upcoming Thanksgiving holiday that will keep the US markets offline on Thursday. This could make for a period of directionless drift in the G10 FX space into the week-end. However, thin trading conditions may amplify knee-jerk volatility in the event that an unexpected event risk spooks the markets. Seemingly potent moves generated under these circumstances may struggle for follow-through and unravel once liquidity returns.

The Australian and New Zealand Dollars moved higher in otherwise quiet overnight trade. The moves appeared corrective after the two currencies lagged their G10 counterparts in the prior session. The Kiwi outperformed, which may have reflected pre-positioning ahead of a 2020 government bond auction. Demand swelled at a bill sale yesterday compared, seemingly speaking to investors’ desire for NZD-denominated paper. This is a highly speculative hypothesis however.


Asia Session

23:50JPYPPI Services (YoY) (OCT)0.5%0.5%0.5%
23:50JPYBOJ October Meeting Minutes ---
00:00AUDSkilled Vacancies (MoM) (OCT)0.6%-1.1%
00:30AUDConstruction Work Done (3Q)-3.6%-2.0%2.1%
01:45CNYWestpac-MNI Consumer Sentiment (NOV)113.1-109.7
05:00JPYSmall Business Confidence (NOV)49.9-48.7
05:00JPYLeading Index (SEP F)101.6-101.4
05:00JPYCoincident Index (SEP F)112.3-111.9

European Session

07:00CHFUBS Consumption Indicator (OCT)1.60 (A)1.56Low
09:30GBPBBA Loans for House Purchase (OCT)4550044489Low
09:30EURECB’s Honohan Speaks in Dublin--Low
10:00EURECB Releases Financial Stability Report--Medium
10:20AUDRBA's Debelle Speaks in London --Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.