A busy week ahead with inflation and central bank minutes in focus

United States Dollar:

The pound suffered on Friday as GBP/USD broke down through support at 1.5650. The dovish inflation report earlier in the week and the broad dollar strength saw the pair fall to a low of 1.5601. Better than expected US retail sales data on Friday was also a contributing factor – retail sales and core retail sales in October both printed above market forecasts at 0.3% respectively (vs. exp. 0.2%). US premium consumer sentiment was stronger than forecasted too. GBP/USD found good support at 1.56 though and traders unwound some of their long dollar positions before the weekend fell. GBP/USD pushed back up through 1.5650 on Friday, trading to a high of 1.5729 earlier this morning. It has settled back since London has come online and opens this morning at 1.5660. It’s a busy week this week, with UK inflation data is due on Tuesday and MPC minutes on Wednesday. Likewise, US FOMC minutes are due later that same day with U.S. inflation figures due on Friday.

Euro:

EUR/USD slumped to 1.2397 on Friday as US data printed better than forecasted and the dollar strengthened across the board, despite the release of better than expected French and German GDP data that morning. That said, q/q growth at 0.3% and 0.1% still makes for pretty feeble reading. Just as GBP/USD found support at 1.56, EUR/USD was well bid under 1.24 and finished the week (in the late New York session) at 1.2545. It went on to trade to a high of 1.2575 in Asia and opens this morning at 1.2525. Focus early this week will be on a speech from ECB President Draghi. His position as ECB president has been questioned of late, but his comments will no doubt be centred on monetary policy as he testifies before the Committee on Economic and Monetary Affairs in Brussels.

Aussie and Kiwi Dollars:

Both AUD/USD and NZD/USD have rallied since Friday morning, mostly as a result of the short squeeze we’ve seen in the USD. NZ Retail Sales data were also stronger than expected, rising 1.5% in the September quarter vs. expectations for a rise of 0.8%. In other news (and what was arguably the biggest news event overnight) Japanese Q3 GDP printed at -1.6% y/y, showing that Japan had slipped back into recession. The Yen immediately weakened on the news and AUD/JPY and NZD/JPY both pushed higher. However, the gains failed to endure and both pairs slipped lower come the afternoon in Tokyo. AUD/USD and NZD/USD open this morning at .8755 and .7935 respectively.

Data releases for the next 24 hours:

AUD: CB Leading Index m/m, Monetary Policy Meeting Minutes, RBA Gov Stevens Speaks

EUR: Italian Trade Balance, Trade Balance, German Buba Monthly Report, ECB President Draghi Speaks

GBP: Construction Output m/m

NZD: No data

USD: Empire State Manufacturing Index, Capacity Utilization Rate, Industrial Production m/m