The U.S. Dollar traded lower versus several Forex majors on metrics which revealed that consumers anticipate Inflation will decline over the months to come, and could post at 2.6 percent for the year, rather than the 2.9 percent predicted in October. The greenback rallied dramatically earlier on Friday when the University of Michigan reported that the Consumer Sentiment Index climbed to a seven-year high of 89.4, beating estimates. And while investors anticipate that the Federal Reserve could raise the interest rate earlier than expected, many will keep an eye on this week's data and the Fed's monetary policy meeting minutes. These are expected to offer insight into when the policy makers think they'll be able to raise the benchmark interest rate. The Dollar Index, which gauges how the U.S. Dollar does against a basket of currencies hit the highest reading in four years. Other announcements issued on Friday confirmed that U.S. Retail Sales climbed 0.3 percent in the past month as consumers have more money at their disposal since fuel costs have plunged. Core Retail Sales, which do not take into account volatile items like transportation rose 0.3 percent instead of the expected 0.2 percent.
And as the greenback dropped towards the end of Friday's trading session, Gold Prices went back up. Contracts for delivery in December traded at $1,185.60 a troy ounce on the New York Mercantile Exchange, denoting at 2.07 percent hike. The precious metal reached a session high of $1,192.90 an ounce in the morning hours; and for the week, the commodity jumped 1.33 percent, sustaining the first weekly advance in one month.
The Euro climbed versus the U.S. Dollar as regional data met expectations, despite the fact that the numbers were low. The E.U. posted mild growth, while nations such as Germany and France showed that they averted falling into a recession by a slim margin. The bad news came from Inflation releases, which divulged that the E.U.'s deflationary pressures persist.
The British Pound fell to a twenty-month low versus the Euro after the Bank of England published the U.K.'s Inflation reports; and it slumped against the greenback as the central bank slashed the growth predictions for the year and the year ahead.
In Japan, companies are worried about the timing for another sales tax hike, since the one issued in April has dampened economic growth. Prime Minister, Shinzo Abe has talked about postponing it, but several firms hope the Premier will discard the idea. Meanwhile, Mr. Abe suggested that he'll call for elections in the early part of December. The Bank of Japan is scheduled to meet this week, and it's likely that the markets will monitor the meeting's progress since the last one caught investors off guard with unexpected announcements.
And Australia's Dollar rose versus the greenback on the possibility that iron ore, one of the nation's main exports will probably appreciate in the next months. New Zealand's Dollar erased losses against its U.S. peer despite statements from the Reserve Bank's governor, Graeme Wheeler, who intimated that the Kiwi's value is still "unjustified and unsustainable."
EUR/USD- Two Nations Averted A Recession
The EUR/USD traded higher and soared towards the end of the past week following the announcement of Euro region CPI and GDP. The Euro-zone's metrics met expectations, although they remained a source of worry. The E.U. revealed that its economy grew 0.2 percent in the months of July to September, disappointing investors since the economy expanded 0.6 percent at the same time in 2013. Germany managed to beat slipping into a recession by sustaining growth of 0.1 percent in the third quarter, while France did the same by posting a Gross Domestic Product of 0.3 percent. Greece offered great news divulging that it has emerged from six years of recession, but Italy offered dire data indicating that it has fallen back into a recession with an economy that shrank 0.1 percent. The lackluster fundamentals cemented speculation that the European Central Bank will have no choice but to implement further stimulus as the current measures have not rendered remarkable results.
GBP/USD- Housing Prices Dip
The GBP/USD plummeted despite the fact that economists say the U.K. remains the "fastest-growing" among the G-7 countries. However, in London, House Prices have plunged to the lowest level in four years, Industrial Output posted slow growth, and Retail Sales dipped more than predicted. In other news, Consumer Price Inflation came in at 1.3 percent for October. The GBP/USD touched a 14-month low as the Inflation Reports issued by the central bank were rather negative, denoting that the economy won't expand in 2015 as expected. The Bank of England also suggested that Inflation could dip further. Policy makers believe that the inflation rate may not meet the 2 percent target for three years.
AUD/USD- Deal With China Forecast To Boost Economy
The AUD/USD rallied on Friday as demand for the greenback ebbed in the market upon the release of news intimating that Inflation levels could drop in the U.S. Analysts anticipate that the AUD/USD could strengthen further as the South Pacific nation discussed entering into a deal with China, its main trade partner. This agreement is anticipated to boost exports and help the economies of the two nations. Chinese sources say that the deal will open new markets for China, and Aussie sources say that the trade agreement will increase exports beyond metal commodities. In the meantime, the chief Executive of Rio Tinto stated that iron ore prices could climb over time. Mr. Sam Walsh, who heads the institution said that the markets won't always have excess supplies and at some point, the commodity will have to go up in value.
EUR/JPY- Euro Rallied Ahead of G-20
The EUR/JPY rose as the Yen remained under pressure on speculation that Japanese Prime Minister, Shinzo Abe, could hold elections in the first week of December. The EUR/JPY rallied as the G-20 opened their summit. The gathering did not get off to a positive start. Russia's President, Vladimir Putin walked off as the initial topic of discussion was the Ukraine. Leaders of the G-20 are expected to address major issues such as the global economic slowdown and the fact that several nations could intervene in the market to influence currency fluctuations to boost exports. In the Euro, the Gross Domestic Product met forecasts with a hike of 0.2 percent. Germany and France missed falling into a recession, while Greece posted stellar numbers signaling its emergence from deflation. The panel which is governed by the Council on Economic and Fiscal Policy stated that the E.U. ought to be looking at bolstering employment for women in their 30s and 40s.
Today's Outlook
Today's calendar shows that the Euro region will report on Trade Balance. The U.S. will issue the N.Y. Empire State Manufacturing Index, Industrial Production and Manufacturing Output. Australia will publish the CB Lending Index and the Monetary Policy Meeting minutes. Lastly, China will reveal House Prices.