Currency Market Analysis
Nov 27, 2019 | Currency Market Analysis
All was mostly quiet across currency markets on the eve of America’s Thanksgiving holiday. The greenback steadied, along with rivals from Europe, Japan and Canada. While subdued, currencies could stir today when markets are likely to increasingly thin ahead of the holiday break and when numbers come due from the U.S. on revised third quarter growth, consumer spending, and the Fed’s main gauge of inflation. Prints consistent with the world’s biggest economy remaining in a “good place” could be enough to keep the greenback biased toward the upper end of its ranges. The buck has recently hovered around multiweek highs against the euro, yen and Canadian dollar.
EUR/USD implied volatility curve, which reflects how much exchange rates are expected to change over different time periods has fallen to record lows – reflecting a lack of realized and expected volatility in the spot market of EUR/USD. A steady outlook for U.S. and European monetary policies has contributed to the pairs limited swings of late. Still, the euro is currently sitting just above key support, a level that if broken to the downside could open the door to further weakness over the short run.
Market participants eye YouGov’s multi-level regression and post-stratification (MRP) poll today around 5 p.m. ET. This more sophisticated poll accurately predicted Britain’s 2017 hung parliament result and will try and predict the outcome of the UK election on Dec. 12. If the prediction reveals a Conservative majority, sterling could strengthen. But a big risk lies to the downside, if the poll forecasts a hung parliament.
A focus for US Dollar traders today is the influx of key macroeconomic data this morning. At 8:30 a.m. ET, the second estimate of third quarter GDP will be released with personal spending and inflation. Another eye will also be on the latest developments in the US-China trade talks ahead of the holiday-shortened week for Thanksgiving celebrations starting tomorrow.
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