This week, there has been a resurgence in the dollar. Amidst speculations about the cessation of US interest rate hikes and early-start rate cut expectations, the dollar had exhibited a clear downward trend in November. US monetary authorities have been cautioning against incorporating expectations of a rate cut into the market, especially given the situation where the inflation target has not yet been achieved. Just ahead of the blackout period before the end of last week, Federal Reserve Chair Powell adhered to his long-standing hawkish stance. However, there were moments when the market reacted to Chairman Powell’s statement that “interest rates are deeply into restrictive territory” with a sell-off of the dollar. The market has been characterized by persistent selling pressure on the dollar.
However, this week, considering the highly anticipated US employment statistics due on Friday, we are witnessing a resurgence in the dollar due to position adjustments.
Today, we have several economic indicators scheduled for release, including the US ADP employment report for November, US non-farm labor productivity and unit labor costs for the third quarter (revised), and US trade statistics for October. Yesterday, the JOLTS job openings figure came in at 8.733 million, well below the market’s expectation of 9.3 million, but the market did not lean towards selling the dollar. Currently, there seems to be more pressure on the dollar for a downward adjustment. The market will be closely watching the dollar’s reaction to today’s US indicators to gauge the progress of position adjustments.
In addition to the above-mentioned US-related economic indicators, there are other economic data releases scheduled for today, including Germany’s manufacturing new orders for October, Eurozone retail sales for October, Canada’s international merchandise trade for October, Canada’s central bank policy rate for December, and Canada’s Ivey Purchasing Managers Index (PMI) for November.
In terms of speaking events, Bank of England Governor Bailey will hold a press conference regarding the Bank of England’s Financial Stability Report. The US weekly petroleum inventory statistics will also be released. There are no scheduled speeches by central bank officials from the US or Europe.
With the dollar’s movements being sensitive to the US indicators, the current market sentiment indicates a preference for selling the dollar. We will continue to monitor the dollar with a bias towards USD selling, particularly after the US trade balance data is released.
