Dollar Jumps, Euro Slides Past 7 Month Low; The Week Ahead

deflaThe euro is under pressure again on Monday and is resuming its downtrend following dovish monetary policy comments late last week from ECB President Mario Draghi that sent the currency to a 7 month low.

The euro is currently trading at 1.0624, moving off its lows of the day, but it still remains under pressure and isn’t far away from its 52 week low of 1.0463.

The U.S. dollar is moving in the opposite direction and is up against the Japanese Yen as currency traders bet that the U.S. Federal Reserve will begin to raise interest rates at their upcoming December 15-16 FOMC meeting that will also have a summary of economic projections and a press conference by Fed Chair Janet Yellen.

During a shortened trading week in the U.S. due to the Thanksgiving holiday on Thursday, the economic data will also be light as earnings season comes to a close.

On Monday existing home sales for October will be released.

On Tuesday the second estimate of 3rd quarter GDP will be reported in addition to consumer confidence (November) and Case-Shiller 20 city Index (September).

Economists from are forecasting a revised 3Q GDP reading of 2.1 percent, up from 1.5 percent in the first estimate.

Wednesday will be a busy day for economic data.

Central bankers at the Fed will be watching closely to see what happens with their preferred inflation reading with PCE prices (core) for October.

Economists from are forecasting a 0.2 percent increase for October after a 0.1 percent gain in September. On a yearly basis the value increased 1.3 percent, which is still well below the Fed’s 2 percent inflation target.

Although some U.S. central bankers pay closer attention to the trimmed mean PCE inflation rate calculated by staff at the Dallas Fed, the core PCE price reading that will be released on Wednesday tends to carry more weight and is the main inflation gauge that central bankers pay attention to when determining monetary policy.

The trimmed Mean PCE inflation rate from the Dallas Fed for September was an annualized 1.7 percent.

Wednesday will also see personal income and personal spending for October, durable goods (October), FHFA Housing Price Index (September), Michigan Sentiment- Final (November), new home sales (October), crude and natural gas inventories (11/21/15)

-Johnathan Schweitzer





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