Dollar Bulls - 3 Things to Be Thankful for

Kathy Lien BKTraders and Prop Traders Edge

This week, Americans will be thinking about all of the things that we can be thankful for. On the first day trading day of this shortened Thanksgiving week, the US dollar is stronger against all of the major currencies. Dollar bulls in particular have a few reasons to be thankful this holiday seasoning. To start, the Federal Reserve has been very clear that barring any unforeseen shocks, further easing may not be necessary. US data is starting to take a turn for the better and the Dow is trading near a record high. Americans are enjoying the combination of growing portfolio values and low interest rates and the hope is that this will translate into a healthier holiday shopping season. Black Friday deals are starting earlier than usual this year, which may help extend the period of demand. Fed Chairman Powell will be speaking later this evening and no major revelations are expected. However Tuesday's new home sales and consumer confidence reports should be strong as they reflect the positive impact of low interest rates and housing data. USD/JPY had a very nice run towards 109 and while the pair stopped right at the 200-day SMA, the path of least resistance should be higher.

Meanwhile EUR/USD fell for the fourth consecutive trading day, coming within a few pips of 1.10. The euro was hit from all sides on Friday (weaker PMIs, ECB comments and stronger US data) and while business confidence improved according to the German IFO report, the selling pressure remains strong. With that said, the IFO report has not fallen since August which confirms our view that the economy is stabilizing. Auto tariffs are still a risk but the November 14th deadline has come and gone with no updates from President Trump.

In contrast sterling snapped a 4 day slide to rise strongly against the euro and US dollar. According to the Confederation of British Industry, consumer spending is picking up ahead of the holiday shopping season. This is very encouraging as the CBI index has a strong correlation with the broader retail sales measure. Sterling traders were also happy with the latest polls showing Tories with a comfortable lead over Labour.

The Canadian and Australian dollars pulled back but the New Zealand dollar held steady ahead of a busy trading week. Third quarter retail sales numbers are scheduled for release from New Zealand tonight followed by the trade balance on Wednesday local time. We've been bullish NZD for some time and expect data to reinforce our view. However the 100-day SMA has limited gains for the past month and NZD find it difficult to push against a pro-US dollar rally.

Author

Kathy Lien

BKTraders and Prop Traders Edge

Having graduated New York University’s Stern School of Business at the age of 18, Ms. Kathy Lien has more than 13 years of experience in the financial markets with a specific focus on currencies.

AUD/USD climbs toward 0.7000 after strong China data dump

AUD/USD attracts follow-through buyers for the second straight day on Monday, extending last week's recovery toward 0.7000 in Monday's Asian trading. Strong Chniese Q3 GDP and activity data for September strengthen the pair's advance, following RBA Assistant Governor Chris Kent's hawkish remarks.

USD/JPY struggles near 158.00 amid hawkish BoJ, subdued USD

USD/JPY remains defensive near 158.00 in the Asian session on Monday, as the US Dollar remains depressed near a two-week low amid the recent decline in US bond yields. Furthermore, looming intervention risks underpin the Japanese Yen and weigh on the pair amid BoJ Governor Kazuo Ueda's hawkish remarks. However, Fed rate-hike bets and geopolitical uncertainties could limit USD losses and the major.

Gold rangebound as easing October Fed bets clash with firm December hike pricing

Gold attracts some buyers at the start of a new week, though it lacks bullish conviction and remains below the $4,200 mark. US Federal Reserve Chair Kevin Warsh’s unwillingness to provide any cues on further policy moves led to a reduction in odds for policy tightening later this month. Moreover, the recent sharp retracement slide in US government bond yields from multi-year highs, which dragged the US Dollar to a two-week low, acts as a tailwind for the bullion.

Cardano risks 15% downside as retail demand, bullish momentum wane

Cardano (ADA) is trading above $0.2200 at press time on Monday, holding steady after a 12% decline the previous week. The altcoin is losing retail interest as the notional value of active ADA futures positions declines. The technical outlook for ADA suggests a downside bias following the bearish breakout below a near-term support trendline last week.

What to expect in the week ahead

Investors are still digesting last week’s price action as we start a new week. US stocks sold off sharply, with the Swiss and UK indices attracting inflows as tech sold off. Sovereign bonds, particularly Treasuries, rallied and acted as a safe haven as the AI trade suffered another bout of volatility.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.