Drivers for the Week Ahead

  • Markets are breathing a sigh of relief after the G20 meeting
  • Russia and Saudi Arabia agreed to extend their plan to support the oil market into 2019
  • The Trump-Xi dinner yielded a 90-day truce
  • The November US jobs report Friday will be the data highlight of the week
  • There is a full slate of Fed speakers this week before the pre-FOMC press embargo goes into effect next week
  • Ahead of the December 11 UK parliamentary vote on May’s Brexit plan, the bill will be debated
  • Reserve Bank of Australia meets Tuesday and Bank of Canada meets Wednesday

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Dollar Claws Back Losses Ahead of Weekend and G20

  • The dollar continues to claw back some of this week’s losses ahead of the weekend
  • Yesterday, FOMC minutes did not really reveal much new but markets of course focused on the dovish aspects
  • The G20 meeting gets under way today in Buenos Aires; the most important meeting will be that of Trump and Xi.
  • Eurozone reported preliminary November CPI; Italy signaled some willingness to tighten its budget
  • China reported weak official November PMI
  • Japan reported a fair amount of data; The BOJ tweaked its bond-buying program slightly
  • Bank of Korea hiked rates 25 bp to 1.75%, as expected; Poland November CPI rose 1.2% y/y; India reports Q3 GDP

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Dollar Stabilizes in the Wake of Powell Comments

  • The dollar has stabilized after the initial sell-off in the wake of Powell’s speech
  • Markets might be reassessing the knee-jerk reaction to Powell
  • Fed messaging could use some work; FOMC minutes will be released today
  • Oil prices have slid to new lows for this move today
  • Germany reports preliminary November CPI today, followed by the eurozone reading Friday
  • Banco de Mexico releases its monetary policy minutes

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Markets Take Renewed Fed Criticism in Stride

  • The dollar is trying to build on its recent gains
  • President Trump’s criticism of Fed policy has resumed; Fed Chairman Powell speaks today
  • During the North American session, the highlight will be revised US Q3 GDP
  • Bank of England releases its Brexit analysis; May reportedly backed down on efforts to prevent parliament from amending the Brexit deal
  • Brazil reports November IGP-M wholesale inflation and October PPI

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Dollar Firm Ahead of Clarida and Powell

  • The dollar is gaining more traction as US rates markets are giving back some of the recent dovish drop
  • Fed Vice Chairman Clarida speaks today while Chairman Powell speaks Wednesday
  • UK Prime Minister May is in Northern Ireland as part of her campaign to get her Brexit deal passed
  • There are signs of some capitulation by Italy’s populist government
  • President Trump signaled that he will likely increase tariffs on $200 bln of Chinese goods from 10% to 25% come January 1
  • Brazil reports October current account and FDI; Mexico reports October trade

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Drivers for the Week Ahead

  • The dollar is caught between safe-haven flows and the shift in market Fed expectations
  • Clarida speaks Tuesday while Powell speaks Wednesday; FOMC minutes will be released Thursday
  • The EU signed off on May’s Brexit deal at the weekend summit in Brussels
  • It’s clear that the Q3 slowdown is more than just a temporary phenomenon in the eurozone
  • Italy signaled some willingness to tweak its budget
  • Oil prices are likely to continue falling
  • It’s a quiet week for EM in terms of central bank meetings and data

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Dollar Firms as US Returns from Holiday

  • The dollar has caught a bid as US markets return from holiday
  • The path to a Brexit deal has been anything but smooth
  • The EU will still hold a special summit this Sunday for leaders to approve the Brexit deal
  • Weaker than expected eurozone flash PMIs for November were reported
  • As we expected, SARB hiked rates 25 bp to 6.75% yesterday
  • Singapore October CPI rose 0.7% y/y vs. 0.8% expected; Brazil mid-November IPCA inflation is expected to rise 4.46% y/y

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Dollar Consolidates as Equity Markets Stabilize

  • The global equity sell-off has paused and the dollar is consolidating its recent gains
  • The European Union (EU) just released its report on all member draft budgets
  • UK Prime Minister May heads to Brussels today to finalize a Brexit deal ahead of Sunday’s summit
  • A USTR report made it clear that US-China tensions remain high
  • Korea reported weaker trade data for the first 20 days of November; South Africa October CPI rose 5.1% y/y vs. 5.2% expected

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Dollar Firms as Equity Markets Remain Under Pressure

  • The dollar continues its rebound as global equity markets remain under pressure
  • We think that the market is overreacting to two Fed speeches and underreacting to ongoing firmness in the US data
  • We are going to go out on a limb and reiterate our strong dollar call
  • Markets await the European Commission’s report on member states’ draft budgets tomorrow
  • BOE Governor Carney testified today before parliament
  • Taiwan and Poland reported firm October data; Hungary is expected to keep policy steady

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