Thanksgiving dollar rally ahead of EU inflation

FX markets have shown greater volatility, with volumes higher across G10 space than we’d normally expect to see over the US Thanksgiving holiday. The Us dollar has reversed most of its 100-point demise following the weaker US data readings this week and as we await the EU CPI reading for November.

The much-awaited decision from OPEC ignited downside pressure on the CAD and the NOK as the committee (as expected) decided not to cut oil production, which obviously has implications for countries on the brink of deflation. But it appeases those countries looking to stimulate their economies as importers of black gold.

Data out of Japan overnight was mixed. The CPI data came in slightly weaker at 2.9% versus the consensus of 3% as retail sales firmly beat expectations at 0.2% against the forecast of -0.6% with retail sales bang on at 1.4% with the Japanese jobless rate falling to 3.5%. This inspired the Nikkei to rally 1.23% as USD/JPY trades back on the 118 handle despite the month-end selling flow sighted from exporters.

Ahead of the EU data at 10am this morning, the French have revealed that unemployment hit a record high in October. This will be a blow to PM Hollande as despite the efforts to cut labour taxes and promote state-sponsored jobs programs, the jobless total has risen a further 500,000 as German finance minister Schauble rubs salt in the wounds of the French by reminding EU leaders of the deficit rules.

The data highlight today, as mentioned, will be the EU HICP data this morning which could push the ECB into making further stimulus announcements at next Thursdays ECB meeting.

Meanwhile the open of the FX markets on Sunday will see CHF players digest the vote on SNB Gold reserves.

EUR/USD

Supports 1.2430-1.2380-1.2355  | Resistance 1.2500-1.2530-1.2585

USD/JPY

Supports 117.80-117.30-117.00   | Resistance 118.40-118.60-119.00

GBP/USD

Supports 1.5680-1.5650-1.5590 | Resistance 1.5725-1.5760-1.5820