Forex Today: Timid Dollar recovery ahead of key US consumer inflation data

The highlight of the Asian session will be China's PMIs. Japan will release Industrial Production, Retail Trade, Consumer Confidence, and Housing Starts. Australia's Private Credit data is also due. Later in the day, Eurostat will release Eurozone CPI. Key US data, including the Core PCE and the weekly Jobless Claims, will be released, which could have a critical impact on the Dollar.

Here is what you need to know on Thursday, November 30:

The US Dollar Index (DXY) rose modestly, recovering from monthly lows. The DXY was unable to hold above 103.00. It remains under pressure, but it offers some signs of stabilization, helped by US economic data. The US economy expanded at an annualized rate of 5.2% during the third quarter, above the previous estimate of 4.9%.

On Thursday, the US will report critical data, including the weekly Jobless Claims and, more importantly, the Core Personal Consumption Expenditure Price Index for October. The latter is expected to show further slowing in consumer inflation, with the annual rate of the Core PCE decreasing from 3.4% to 3%. Later, more data is due with the Chicago PMI and Pending Home Sales.

US yields continue to edge lower, while German and even UK bond yields dropped further. The divergence supported the Greenback but the upside was limited amid risk appetite.

EUR/USD dropped after rising for four consecutive days, unable to hold above 1.1000. The pair found support around 1.0960, and the risk remains tilted to the upside. The Euro did not benefit from German and Spain inflation data, which slowed more than expected.

Analysts at Commerzbank on German inflation:

The decline in November is primarily due to a significantly lower core inflation rate, while the contribution from energy and food was limited. In the next two months, the inflation rate is likely to be slightly higher again due to a number of special effects. In the somewhat longer term, the decisive factor will be the extent to which companies are able to pass on their higher wage costs to their customers. We assume that this effect will stabilize the core inflation rate well above the ECB target in the coming year.

More inflation data is due on Thursday with the Eurozone Consumer Price Index. The annual rate is expected to show an increase of 3.9%, below the 4.2% recorded in October. However, a reading below market consensus should not be a surprise. Germany will report Retail Sales for October and the Unemployment Rate for November.

GBP/USD finished flat just below 1.2700 after hitting three-month highs at 1.2732. The Pound also rose against the Euro, with EUR/GBP falling below 0.8650. The Swiss Franc outperformed on Wednesday.

USD/JPY dropped sharply, reaching 146.68, the lowest level in two months, before rebounding towards 147.30. Data due from Japan on Thursday includes Industrial Production, Retail Sales, Housing Starts, and Consumer Confidence.

Of importance for Antipodean currencies and overall sentiment, China will release the NBS PMIs, which are expected to show an improvement in both the Manufacturing and Non-Manufacturing indices.

USD/CAD rebounded at the 100-Simple Moving Average (SMA) and climbed back to 1.3600. The bias is towards the upside, but the pair is trading around a strong support level. Canada will report Q3 GDP data and September's Monthly Growth figures on Thursday.

Analysts at TD Securities on Canada GDP:

We look for a flat print on Q3 GDP, reflecting another muted performance for households and a large drag from residential investment, which is well below BoC projections for +0.8% and should reinforce expectations that the Bank is done tightening. Industry-level GDP should prove slightly more upbeat with a 0.1% increase but this will be paired with another soft flash estimate for October to anchor Q4 growth below 1%.

AUD/USD rose to its highest level in almost four months and then pulled back as the US dollar recovered strength. The pair held above 0.6600. Australia will report Private Sector Credit for October on Thursday.

NZD/USD posted its highest daily close since late July at 0.6150 but ended far from the top. Following the Reserve Bank of New Zealand's hawkish hold, the pair peaked above 0.6200. The retreat casts doubt about more gains in the short term. On Thursday, New Zealand will release Building Permits data, and the ANZ Business Confidence report is also due.

Crude oil prices rose 1.75% in a volatile session. The WTI barrel closed near daily highs, slightly below $78.00, amid speculation about the outcome of Thursday's meeting of the Organization of Petroleum Exporting Countries and its allies (OPEC+).

Gold posted modest daily highs but failed to break above $2,050 despite the decline in government bond yields. Silver ended flat around $25.00.

 

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