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Dollar Bulls - 3 Things to Be Thankful for

  • Kathy Lien
  • 26 November 2019

Daily FX Market Roundup November 25, 2019

 

This week, Americans will be thinking about all of the things that we can be thankful for. On the first day trading day of this shortened Thanksgiving week, the US dollar is stronger against all of the major currencies.Dollar bulls in particular have a few reasons to be thankful this holiday seasoning. To start, the Federal Reserve has been very clear that barring any unforeseen shocks, further easing may not be necessary. US data is starting to take a turn for the better and the Dow is trading near a record high. Americans are enjoying the combination of growing portfolio values and low interest rates and the hope is that this will translate into a healthier holiday shopping season. Black Friday deals are starting earlier than usual this year, which may help extend the period of demand. Fed Chairman Powell will be speaking later this evening and no major revelations are expected. However Tuesday's new home sales and consumer confidence reports should be strong as they reflect the positive impact of low interest rates and housing data. USD/JPY had a very nice run towards 109 and while the pair stopped right at the 200-day SMA, the path of least resistance should be higher.

 

Meanwhile EUR/USD fell for the fourth consecutive trading day, coming within a few pips of 1.10.The euro was hit from all sides on Friday (weaker PMIs, ECB comments and stronger US data) and while business confidence improved according to the German IFO report, the selling pressure remains strong. With that said, the IFO report has not fallen since August which confirms our view that the economy is stabilizing. Auto tariffs are still a risk but the November 14th deadline has come and gone with no updates from President Trump.

 

In contrast sterling snapped a 4 day slide to rise strongly against the euro and US dollar.According to the Confederation of British Industry, consumer spending is picking up ahead of the holiday shopping season. This is very encouraging as the CBI index has a strong correlation with the broader retail sales measure. Sterling traders were also happy with the latest polls showing Tories with a comfortable lead over Labour.

 

The Canadian and Australian dollars pulled back but the New Zealand dollar held steady ahead of a busy trading week. Third quarter retail sales numbers are scheduled for release from New Zealand tonight followed by the trade balance on Wednesday local time. We've been bullish NZD for some time and expect data to reinforce our view. However the 100-day SMA has limited gains for the past month and NZD find it difficult to push against a pro-US dollar rally.

 

 

 

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About the Author
Kathy Lien
Kathy Lien is Managing Director and Founding Partner of BKForex. Having graduated New York University’s Stern School of Business at the age of 18, Ms. Kathy Lien has more than 13 years of experience in the financial markets with a specific focus on currencies

Ms. Kathy Lien is Managing Director of FX Strategy for BK Asset Management and Co-Founder of BKForex.com. Her career started at JPMorgan Chase where she worked on the interbank FX trading desk making markets in foreign exchange and later in the cross markets proprietary trading group where she traded FX spot, options, interest rate derivatives, bonds, equities, and futures.

In 2003, Kathy joined FXCM and started DailyFX.com, a leading online foreign exchange research portal. As Chief Strategist, she managed a team of analysts dedicated to providing research and commentary on the foreign exchange market.

In 2008, Kathy joined Global Futures & Forex Ltd as Director of Currency Research where she provided research and analysis to clients and managed a global foreign exchange analysis team. As an expert on G20 currencies, Kathy is often quoted in the Wall Street Journal, Reuters, Bloomberg, Marketwatch, Associated Press, AAP, UK Telegraph, Sydney Morning Herald and other leading news publications.

She also appears regularly on CNBC’s US, Asia and Europe and on Sky Business. Kathy is an internationally published author of the bestselling book Day Trading and Swing Trading the Currency Market as well as The Little Book of Currency Trading and Millionaire Traders: How Everyday People Beat Wall Street at its Own Game all published through Wiley. Kathy’s extensive experience in developing trading strategies using cross markets analysis and her edge in predicting economic surprises serve key components of BK’s analytic techniques.