Daily Market Update

Dollar Advances Ahead of Data Dump

November 24, 2021

The U.S. Dollar continued its march higher overnight with notable gains versus the New Zealand dollar and more modest ones against the rest of the G10. 

Overview

Global equity markets are lower as renewed covid concerns and lockdowns have soured sentiment.  Disappointing earnings results from companies such as Nordstrom and Gap are weighing on U.S. equity futures and propping up the buck.   The economic docket is heavy today due to the holiday tomorrow.  Early this morning will see the release of weekly jobless claims, third-quarter GDP, and October durable goods orders.  While these prints are all tier 1 data, traders are likely to look past them and focus on the PCE Deflator due out at 10 a.m.  The PCE is the Federal Reserve’s preferred inflation gauge, and it is expected to rise over 4%.

New Home Sales and the University of Michigan sentiment are also due out later this morning.  The minutes from the last Federal Reserve meeting will be released at 2 p.m. All U.S. markets will be closed tomorrow for Thanksgiving.  Tempus Online will be available.

 

What to Watch Today…

  • PCE Deflator at 10 a.m.

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EUR

The Euro continues to take a beating from the U.S. dollar.  The common currency fell another quarter of a percent versus the greenback overnight.  Covid cases continue to surge on the continent and governments are facing massive backlash from citizens as they try to introduce new measures to curb the infection.  Riots have sprung up in the Netherlands, Austria, and a handful of other countries.  France and Italy are debating new measures and Germany held an emergency meeting last night. EUR/USD is now less than half a percent from the lows its saw in June of 2020.

 

NZD

Despite a rally in metals that is deepening inflation concerns, the New Zealand dollar is in a free fall this morning.  The Reserve Bank of New Zealand did raise interest rates to stem inflation, but the central bank only lifted rates by a quarter of a point.  Some hawkish analysts expected the RBNZ to hike 50 basis points.  As a result, the kiwi fell by 0.8%.Governor Adrian Orr explained the cautious approach and said policymakers would stick with 25 basis points “for now.” As a result, traders are paring back expectations for future rate hikes, adding more downward pressure on the currency.

 

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