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Forex - Weekly Outlook: November 19 - 23

Published 11/18/2018, 05:00 AM
Updated 11/18/2018, 05:00 AM
© Reuters. - This week trade tensions and Brexit developments will remain in focus as U.S. markets wind down for the Thanksgiving holiday.

Currency traders will be watching for signs that the U.S. and China are seeking to de-escalate their trade dispute after President Donald Trump said he may not impose more tariffs on Chinese imports if China comes up with terms that he and Beijing could agree on.

Market watchers will also be watching for signs of strength in the U.S. economy as they await spending figures over the Black Friday shopping weekend.

In the UK, Prime Minister Theresa May will be fighting to keep her draft Brexit deal on track amid a leadership challenge from within her own party.

The dollar fell against a basket of the other major currencies on Friday after dovish comments by Federal Reserve Vice Chair Richard Clarida, who said he saw some evidence that global growth is slowing.

Clarida also noted that U.S. interest rates are nearing Fed estimates of a neutral rate, and being at neutral "makes sense."

The comments were seen as an indication that the Fed may pause its interest rates hikes sooner than had been anticipated.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.5% to 96.31 in late trade, to end the week down 0.43%.

Against the yen, the dollar fell to two-week lows, with USD/JPY off 0.73% at 112.83 late Friday.

The euro gained ground against the dollar, with EUR/USD advancing 0.76% to 1.1413.

The euro received an additional boost from hopes that Italy’s Prime Minister Giuseppe Conte is willing to work with the European Union over the country’s 2019 budget, which has been rejected by Brussels.

The dollar was also weaker against the pound, giving back some of Thursday’s gains. GBP/USD was up 0.48% to 1.2834 at the close of trade after tumbling 1.69% on Thursday when a string of British cabinet ministers resigned in protest over the terms of Teresa May’s draft Brexit deal.

Sterling remained weaker against the firmer euro, with EUR/GBP up 0.35% to 0.8901 in late trade.

Ahead of the coming week, has compiled a list of significant events likely to affect the markets.

Monday, November 19

Japan is to release data on trade.

Federal Reserve Bank of New York President John Williams is to speak at an event in New York.

Tuesday, November 20

The Bank of Japan is to publish the minutes of its latest policy setting meeting.

Bank of England Governor Mark Carney and several policymakers are to testify on inflation and the economic outlook before Parliament's Treasury Committee.

The U.S. is to release data on building permits and housing starts.

Wednesday, November 21

The UK is to release data on public sector borrowing.

The U.S. is to publish reports on initial jobless claims and durable goods orders as well as revised figures on consumer sentiment.

Thursday, November 22

Financial markets in the U.S. will be closed for the Thanksgiving holiday.

The European Central Bank is to publish the minutes of its latest policy setting meeting.

Friday, November 23

Markets in Japan will remain closed for a holiday.

The euro zone is to release data on private sector business activity.

Canada is to round up the week with figures on retail sales and inflation.

Trading in U.S. financial markets will end early after Thursday’s holiday.

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