Monetary policy meeting minutes from the Federal Reserve and the European Central Bank will be in focus this week as investors continue to monitor the effects of recent central bank easing against a background of trade uncertainty and slowing global growth.
Appearances by several Fed speakers and a speech by ECB President Christine Lagarde will also be closely watched for any monetary policy insights as trade discussions between the U.S. and China drag on. Meanwhile, a blast of global PMI data on Friday will be scrutinized for any fresh signs of fallout from the trade war.
The dollar was lower late Friday as some optimism for the ongoing trade talks with China buoyed trade-linked currencies like the euro and the British pound.
Against a basket of six major currencies the U.S. dollar index was down 0.17% at 97.85 in late trade.
U.S. Commerce Secretary Wilbur Ross said progress was being made on the agreement’s details, which helped lift trade-exposed currencies at the expense of safe-haven assets such as the Japanese yen.
The dollar fell 0.3% against the euro and 0.2% against the British pound, at 1.1051 and 1.2905 respectively. It rose 0.3% versus the yen, last at 108.73, after the safe-haven currency had gained earlier in the week as political unrest in Hong Kong and trade uncertainty reduced appetite for risk. The Swiss franc also weakened 0.2% versus the dollar.
“It may not be a game-changer,” said Terence Wu, a treasury strategist at OCBC Bank in Singapore. “Thus, we think any reversal in the risk-off trades may not see a good shelf-life.”
Mixed signals on trade negotiations have abounded in recent days while evidence of the damage the dispute is wreaking on the global economy has mounted.
On Friday, the Commerce Department reported that U.S. retail sales rebounded in October, but consumers cut back on purchases of big-ticket household items and clothing, raising questions about the consumer strength currently underpinning the U.S. economy.
That may have also contributed to the rise in the euro and the pound.
“When we were looking at second-quarter numbers for Europe and the United Kingdom, those numbers were very worrisome, but now that we’re looking at the third-quarter numbers, their progress has been a little bit better and their pace has been at expectation or beyond, whereas the United States has actually slowed down,” said Perez.
“The dollar is finally today reacting to those numbers and saying the economic pace of the United States is not that great.”
Ahead of the coming week, profxtigers.com has compiled a list of significant events likely to affect the markets.
Tuesday, Nov 19
Australia – Monetary policy meeting minutes
Canada – Manufacturing sales
Wednesday, Nov 20
ECB financial stability review
Canada – CPI
U.S. – FOMC meeting minutes
Thursday, Nov 21
U.S. – Philly Fed; initial jobless claims; existing home sales
Friday, Nov 22
Japan – Flash manufacturing PMI; CPI
ECB President Lagarde speaks
Eurozone – Flash manufacturing and services PMIs
Canada – Retail sales
U.S. – Flash manufacturing and services PMIs
–Reuters contributed to this report
Professional Financial Market Trader. 4 Years of experience | Author at profxtigers.com