Dollar Dips As Consolidation Continues, Busy Week Ahead

 | Nov 28, 2016 01:28AM ET

Dollar's pull back continue as another week starts as markets prepare for a week full of important economic data. Dollar index dips to as low as 100.64 so far, comparing to last week's high at 102.05, but stays well above 100 handle. Technically, Euro, Yen and Swiss Franc have taken out respective minor resistance against the greenback, which confirm their turning into consolidative phase for the near term. In other markets, stocks are mixed with Nikkei trading -0.2% lower while HSI is up 0.8%. Gold is attempting a rebound and is heading back to 1200 handle. WTI crude oil dived to as low as 45.14 earlier today but is back pressing 46.

Talking about Crude oil, the OPEC meeting in Vienna this Wednesday will be a major focus for the week. The latest news is that while some members, such as Algeria and Venezuela, seek to reach a deal to output cut, Saudi Arabia has recently suggested that a rate cut might not be needed as demand should recover next year. Khalid Al-Falih, the Kingdom's oil minister indicated that with oil demand expected to "recover in 2017, then prices will stabilize, and this will happen without an intervention from OPEC". Regarding the cancellation of the pre-meeting discussion originally scheduled on Monday, he noted that "it's not beneficial to attend the meeting with producers from outside OPEC before holding meetings within OPEC and deciding whether to cut or continue with current levels of production". In the meantime, Algeria and Venezuela continue to seek support from Russia with energy ministers of both countries will meet in Algiers and then travel to Moscow on Monday.

The hope for a production cut and rebound in oil prices kept Canadian dollar support, which will likely possibly end the month as the third strongest major currencies, next to Sterling and Dollar. CAD/JPY is one of the biggest gainer for the month. And, the strong break of the long term channel resistance confirmed medium term bottoming at 74.80, on bullish convergence condition in weekly MACD. Rise from there should develop into a medium term bullish move for 38.2% retracement of 106.48 to 74.80 at 86.90. This will remain the preferred case as long as 80.79 near term support holds.