USD
With the US out for Thanksgiving yesterday, dollar trading conditions were naturally muted. A similar story is likely to be true today as well, with many in the US taking an extended weekend vacation. Even so, we think dollar risks are skewed to the downside to end this week, with portfolio rebalancing likely to result in dollar selling given the greenback’s run-up this month. For those that are in the office though, thoughts are likely to increasingly turn to events coming up, with November’s jobs report due next week.
EUR
European inflation data should be front and centre for the single currency today. We expect eurozone CPI at 10:00 GMT to undershoot expectations by 0.1-0.2pp. Underpinning this, inflation readings for both France and Germany have disappointed expectations this month. More importantly, if this is replicated in the aggregate figures, then we think this should open the door for a 50bp cut from the ECB next month. Markets currently see the odds of such a move at just shy of 20%. This is despite dovish noises from the ECB’s Villeroy yesterday which sounded to us like he thought jumbo easing should be on the table next month. If we are right, then accelerated easing expectations should see some euro downside today.
GBP
As expected, the blank calendar of events scheduled for the UK saw the pound making gains on Thursday. GBPUSD climbed 0.1% against the dollar and 0.2% against the euro over the course of a quiet trading session. Today, more of the same looks likely. Consumer credit figures, set to be published at 09:30 GMT, are the only data prints of note before the end of the week, while the BoE’s financial stability review is also likely to attract some attention. Even so, barring any notable downside surprises, neither should prove too disruptive for sterling appreciation trend. We continue to think that the pound looks a little undervalued and expect to see further modest upside today.
CAD
Canadian GDP, set for release at 13:30 GMT, should offer something to keep loonie traders busy at the end of another wise quiet week. Even so, the release has arguably been overshadowed by recent events. On the one hand, a holiday stimulus package should ensure a significant GDP uptick through the remainder of the year. On the other, Trump tariffs pose a major downside risk to growth in early 2025. With this in mind, the readthrough from these latest growth figures to how the economy is likely to evolve, is muddied at best. So, while a modest upswing in September growth readings looks probable today, loonie traders are likely to discount the reading, limiting the impact for USDCAD.
