Global Themes

The U.S. dollar maintained a weaker bias after America’s Thanksgiving holiday. The dollar kept broadly softer and was on track for a weekly decline. Sentiment towards the dollar eroded this week after minutes from the last Federal Reserve meeting showed that officials were still perplexed about low inflation whose underlying level has kept below the central bank’s 2% goal for 5 years. The Fed is still expected to raise interest rates next month but forecasts of three more rate increases next year remain a tough sell for markets, weighing on the dollar. Trading remained light with many players still on holiday. The dollar’s inflation woes could momentarily take a back seat if U.S. retailers report solid sales for Black Friday, when consumers traditionally ramp up spending for the holidays.

USD

The U.S. dollar nursed weekly losses in extended holiday trade, undermined by stubbornly low U.S. inflation that could limit leeway for higher American lending rates next year. Inflation will be a focal point of a busy week ahead that also features numbers on consumer confidence, revised third quarter growth and consumer spending. If inflation underwhelms, it would catch the dollar at a vulnerable time, a scenario that could usher in another round of depreciation.

CAD

Canada’s dollar was above recent multiweek lows against the broadly weaker U.S. currency. A bounce in oil prices above $58 also supported the commodity-backed Canadian currency. Big data from Canada loom next week on wholesale inflation, employment and third quarter growth.

GBP

Easing Brexit anxiety and a weaker U.S. dollar converged to propel the U.K. pound to six-week peaks. Britain next week will issue factory growth which has been supported by the weaker pound.

JPY

Doubts about the path for higher U.S. interest rates next year weakened the dollar and strengthened the yen to its highest in two months. Japan next week releases critical data on retail sales and consumer inflation which for years has undershot the Bank of Japan’s goal.

EUR

The euro maintained the lion’s share of gains notched Thursday when U.S. markets were closed for Thanksgiving. Another batch of strong European data highlighted the bloc’s bullish fundamentals, a key driver of the euro’s outperformance this year.

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