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Dollar Slips In Quiet Forex Session
The U.S. dollar is slightly lower against a basket of currencies on Monday as investors continue to mull the slightly disappointing U.S. nonfarm payroll (NFP) print from last Friday.
Historically, the first North American session after the jobs release is usually the quietest day of the month, which should give any battle-scared investor enough time to recalibrate. The low-octane start appears to be more risk averse ahead of the Veterans Day holiday tomorrow. Global markets are likely to be calm as a result of U.S. investors taking today off to bridge a four-day weekend.
Forex
After the NFP was released, yields of U.S. 10's finished the week near lows (+2.29%) that provided good enough reason for investors to lock in profits on USD longs. Despite the dollar squeeze lower, the overall market trend remains intact -- bullish on the mighty buck -- with many sideliners preferring to fade U.S. short-term weakness. However, be aware this market has the potential for further immediate risks, particularly for one or two currencies like USD/JPY to sub-¥113.00, and the Aussie dollar to $0.8765 mostly on the back of lower U.S. yields. Gold remains the better bid this morning climbing above $1,171 after rising by its biggest margin since mid-June last Friday.
U.S. Labor Market, Retail Sales Data on Tap
From a U.S. perspective it's a relatively light week on the fundamental side, but there are some key consumer numbers releases. U.S. retail sales have been relatively volatile, mostly on the back of auto sales and gas prices. Employment growth has been moderate at best stateside, and this week's JOLTS (jobs openings and labor turnover survey) will indicate whether there is an improvement in job openings. Despite the sluggish recovery (albeit the best of a bad lot), U.S. consumer sentiment has somewhat improved mostly due to stable labor market conditions. Whether the trend continues will be seen in this coming week's early reading on November consumer sentiment. Finally, initial jobless claims have been trending downward and this week's number could potentially be another market eye opener.
U.K. Inflation Report Under the Microscope
Next Wednesday is dominated by the U.K. Average earning reports, a jobless claimant count, and the Bank of England’s (BoE) Governor Mark Carney will hold a press conference, along with other Monetary Policy Committee members, to discuss the bank’s Quarterly Inflation Report. The report will be closely studied for hints of when the BoE will increase interest rates. U.S. fixed-income traders are looking to price in a hike by the end of the first half of 2015.
For the rest of Europe, flash third-quarter gross domestic product data will be reported, and analysts will be looking to see if the eurozone grew at all or whether the European Central Bank President, Mario Draghi, will have a sleepless early December before the next rate-setting meet. October consumer price data will also be looked at for signs of a pickup in prices with "disinflation, then deflation, then ruination," being the cycle that Draghi and company are trying to break.
