Markets should be back to full vigor with the bulk of US traders back to the desk this week, following the Thanksgiving lull for the second half of last week. While Friday was business as usual market wise there was a notable lull in volume on Friday afternoon and the USD was once again facing heavy selling, EURUSD was up over 2% on last week’s USD weakness, while the weighted USD index was down over 1.5% from the week’s highs. The Euro wasn’t the only currency taking advantage of USD weakness with GBPUSD pressing to 1.5 month highs and back above 1.3330, while USDJPY trades just off two month lows.
The Euro has started the week on a firmer footing following news suggesting Germany may not have to go back to the polls after the SPD said they would consider a coalition with Merkel. Friday’s data releases also played their part in the firmer Euro with a better than expected print of the German IFO. Risk appetite remained solid on Friday, in Europe major indices were slightly higher while in the US retailers and tech stocks were trading higher on hope’s a strong holiday season and reports of record black Friday/cyber Monday would transfer into higher profits, the S&P closed above 2600 for the very first time while the Dow and NASDAQ were also both higher on the day. Overnight Asian bourses were slightly weaker, the Nikkei under some slight pressure by the weaker USD /stronger JPY combination.
Today’s calendar is rather light with only some US Home Sales data later in the day to get our attention. Later this week however we will have some larger talking points. Tomorrow focus will be on OECD economic projections and in the afternoon US consumer confidence. Wednesday will likely be somewhat more active with German CPI inflation reading to set the tone for the Eurozone expectations while later Wednesday afternoon US GDP data and an appearance from Yellen at the Joint Economic Committee in congress should see focus back on the greenback. From the UK attention will be back on Brexit, and while GBP holds steady for now it will still find itself vulnerable to negative headlines.