US Thanksgiving holiday dampened activity.
Narrow ranges prevailed on Thursday with no major incentives while the US Thanksgiving holiday dampened activity.
Risk appetite was slightly more cautious given unease over Hong Kong political developments and an absence of positive trade rhetoric.
In this context, equity markets retreated in Asian trading on Friday. The dollar held a firm tone with EUR/USD trapped marginally above 1.1000.
There were also some expectations that the central bank could adjust its inflation target at the current review. In particular, there was speculation that the bank would shift to a simple 2% target which would tend to remove pressure for any monetary tightening as soon as inflation move above 1.5%. On balance, this would probably mean a looser monetary policy over the medium term. Trading activity was inevitably very light given the US market holiday with EUR/USD settling just above 1.1000.
Activity will remain light on Friday with an early US close, but month-end positioning could trigger choppy trading around the London fix. EUR/USD again held just above 1.1000 in early Europe with a marginally weaker US dollar.
Sterling held a firm tone in early Europe on Thursday with positive sentiment following Wednesday’s YouGov poll suggesting a comfortable Conservative majority was the most likely outcome. There was, however, GBP/USD resistance on approach to 1.2950 while GBP/EUR found support close to 1.1720 during the London session. There was wariness of anticipating a Conservative victory given potential shifts in voting and reservations over the longer-term outlook.
Consumer confidence was unchanged at -14 for November, but the Lloyds business barometer strengthened to 9 from 6 previously which was the third successive increase and strongest level since January with hopes that political uncertainty would ease. Sterling traded marginally higher in early Europe on Friday.
Markets will be wary of choppy trading on Friday with position adjustment ahead of the weekend when further opinion polls will be released. There is also the potential for volatility associated with month-end trading as GBP/USD traded just above 1.2900.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:45 | Consumer Spending MM(OCT) | - | -0.40% |
| 07:45 | GDP Detailed QQ | - | 0.30% |
| 08:00 | CHF KOF Leading Indicator(NOV) | - | 94.7 |
| 08:55 | German Unemployment Rate(M/M)(NOV) | 5.00% | 5.00% |
| 08:55 | German Unemployment Change(M/M)(NOV) | 2K | 6K |
| 09:00 | Unemployment Rate(OCT) | 9.60% | 9.90% |
| 09:30 | GBP Consumer Credit(OCT) | 0.900B | 0.828B |
| 09:30 | GBP Mortgage Approvals(OCT) | 65.00K | 65.92K |
| 10:00 | CPI (EU Norm) Prelim MM(NOV) | - | -0.10% |
| 10:00 | CPI (EU Norm) Prelim YY(NOV) | 0.20% | 0.20% |
| 10:00 | CPI (EU Norm) Final YY*(NOV) | 0.20% | 0.20% |
| 10:00 | CPI (EU Norm) Final MM*(NOV) | 0.20% | 0.20% |
| 10:00 | Euro-Zone CPI (Y/Y)(NOV) | 0.70% | 0.70% |
| 10:00 | Euro-Zone Unemployment Rate(OCT) | - | 7.50% |
| 11:00 | GDP Prelim QQ | - | 0.10% |
| 11:00 | GDP Prelim YY | - | 0.30% |
| 12:30 | CAD GDP (M/M)(SEP) | 0.20% | 0.10% |
| 13:30 | CAD GDP Annualized (Q/Q) | - | 3.70% |
| 13:30 | CAD RMPI (M/M)(OCT) | - | -1.80% |
| 14:45 | USD Chicago PMI(NOV) | 47.1 | 43.2 |