USD benefits from strong data and lower oil price

Today's Highlights

Thanksgiving Day volatility ahead

USD benefits from strong data and lower oil price

AUD weaker on RBA comments

FX Market Overview

Happy Thanksgiving Day to all our American readers. And to all the US Turkeys, RIP. As American markets will be closed for business, it is not possible to book contracts to settle today so please be aware of that.

We heard that, in spite of the fall in oil prices, OPEC has no plans to drop production; prompting speculation that the oil producing nations are trying to price shale gas and oil-sand producers out of the market. Whatever the motive, that prompted a further decline in crude oil prices and it does boost the value of the US Dollar, in which most commodities are traded.

So this is the day upon which most traders in America will be giving thanks for the fact that they have a day off to brace themselves for the massive shopping mission ahead. Thus the volume of trading in the markets will be lighter; especially in the afternoon session for the UK. As such, the volatility is likely to be more pronounced and there is plenty of scope for spikes and troughs. It would be good to have orders in at strategic levels for any requirements.

By way of forex news, the big news for the day will come from the Eurozone in the form of inflation and confidence indices. If the forecasters have got their sums right, this data will be mildly negative for the euro. It will also be overshadowed by the obvious disagreements within the Eurozone on the best course of action for the ECB. President Mario Draghi is espousing further bond buying and monetary expansion whilst the German authorities are averse to that and would prefer further austerity. Meanwhile, the Euro is suffering but a weaker Euro would benefit all Eurozone members. So perhaps no one will want to reach agreement.

Farther afield, the Australian Dollar has slumped in the past few days as commodities have fallen in value and comments from the Reserve Bank of Australia suggesting the AUD is still far too strong. That is a well-worn mantra from the RBA, so it is a surprise that it holds any sway with traders. Nevertheless, it has had an effect and there are opportunities for AUD buyers.

And the Reserve Bank of New Zealand reported that it sold NZ$1 million last month in an attempt to weaken their currency. Just like the RBA, New Zealand's central Bank sees the NZD as being too strong. However, NZ$1 million is barely a pixel on a Kardashian bottom in comparison to the $5.3 trillion traded in the global FX market daily. It is clear that the threat and expectation is the driving factor in any intervention success.

Away from the markets, scientists believe they have discovered the next drug and bomb smuggling detectors. They believe fruit flies could be trained to seek out these items instead of overripe fruit and may even use them at airports. I suspect the prospect of being overwhelmed by fruit flies would be enough to put most smugglers off. Can you imagine! Quote

I took my kids to the National Space Centre today. There was nothing there.
Anon