Forex - Weekly outlook: 11.27 - 12.01
The dollar fell to its lowest level since mid-October against a basket of the other major currencies on Friday as euro zone data pointed to solid growth, while concerns lingered over the sluggish rate of U.S. inflation.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.34% to 92.72 in late trade. For the week, the index was down 0.93%, its third consecutive weekly decline.
The dollar remained on the back foot after Wednesday’s minutes of the Federal Reserve’s November meeting showed that some officials were concerned inflation would stay below the bank's 2% target for longer than expected.
The minutes echoed comments by Fed Chair Janet Yellen earlier in the week that she was uncertain about the inflation outlook.
While a rate hike in December is still almost fully priced in, investors pared back expectations for further rate hikes in 2018, sending the dollar lower.
A report on Friday showed that German business confidence hit a record high in November, putting the euro area’s largest economy on track for a boom.
The data came one day after official data showed exports and rising business investments were the main drivers of euro zone growth in the third quarter, indicating that the robust upswing will extend well into next year.
The strong data helped offset concerns over political uncertainty in Germany, where Chancellor Angela Merkel is trying to form a minority coalition government after recent elections saw established parties loose seats in parliament.
EUR/USD was up 0.68% to 1.1932 late Friday, its highest level since September 22. For the week, the common currency was up 1.14%, its second consecutive weekly gain of more than 1%.
Against the yen, the euro was also higher, with EUR/JPY advancing 0.93% to 133.03, the highest since November 17.
The dollar was higher against the yen, with USD/JPY rising 0.28% to 111.52.
Elsewhere, sterling gained ground against the dollar, with GBP/USD up 0.19% at 1.3332 in late trade.
In the week ahead, the changing of the guard at the Federal Reserve will be a big focus for investors, with investors awaiting comments from a number of Fed speakers, including both the current chair and next head of the U.S. central bank.
U.S data on personal income and spending, which includes the personal consumption expenditures inflation data, the Fed's preferred metric for inflation, will also be closely watched.
Monday, November 27
The U.S. is to release data on new home sales.
New York Fed President William Dudley is to speak at an event in Berkley California.
Tuesday, November 28
The Bank of England is to publish its financial stability report.
Canada is to report on raw material price inflation.
The U.S. is to release data on consumer confidence.
Fed governor Jerome Powell, selected by President Donald Trump as the next Fed chair, appears before the Senate Banking Committee for his confirmation hearing.
Philadelphia Fed President Patrick Harker is to speak.
Bank of Canada Governor Stephen Poloz is to speak at an event in Ottawa.
The Reserve Bank of New Zealand is to publish its financial stability report.
Wednesday, November 29
Germany is to release preliminary data on inflation.
The UK is to publish data on net lending.
The U.S. is to release revised data on third quarter growth.
New York Fed President William Dudley is to speak.
Fed Chair Janet Yellen is to testify on the U.S. economic outlook before Joint Economic Committee of Congress, in Washington.
The U.S. is to release data on pending home sales.
Thursday, November 30
New Zealand is to release data on business confidence.
Australia is to publish figures on private capital expenditure and building approvals.
China is to produce report on manufacturing and service sector growth.
The euro zone is to publish its preliminary inflation estimate.
The U.S. is to release data on personal income and consumer spending, which includes the personal consumption expenditures (PCE) inflation data, the Fed's preferred metric for inflation.
The U.S. is also to publish the weekly report on jobless claims and data on business activity in the Chicago region.
Dallas Fed President Robert Kaplan is to speak.
Friday, December 1
China is to publish its Caixin manufacturing index.
The UK is to publish its manufacturing index.
Canada is to publish data on economic growth and employment.
Dallas Fed President Robert Kaplan and Philadelphia Fed President Patrick Harker are to speak.
The Institute for Supply Management is to publish its manufacturing index.