iFOREX Daily Analysis : November 28, 2016
iFOREX | Nov 28, 2016 04:19AM ET
The dollar fell against a currency basket in holiday-thinned trade on Friday as investors took profits after a powerful rally that propelled the U.S. currency to almost 14-year highs.
U.S. markets were closed Thursday for the Thanksgiving holiday and Friday was a half-day session. On Thursday, the index surged to highs of 102.07, a level not seen since April 2003.
The index has risen around 6% in the last two months amid expectations that increased fiscal spending and tax cuts under the Trump administration will spur economic growth and inflation.
The dollar has also been boosted by the view that a rate hike by the Federal Reserve in December is a near certainty.
In the week ahead, markets will be paying close attention to Friday’s U.S. nonfarm payrolls report for November as well as data on U.S. economic growth and manufacturing for fresh indications on the likelihood of a December rate hike. Investors will also be watching euro zone inflation data and manufacturing reports out of the U.K. and China.
EUR/USD
The euro pushed higher, with EUR/USD rising 0.31% to 1.0586 late Friday after falling to lows of 1.0517 on Thursday, the weakest level since December 2015.
Today European Central Bank President Mario Draghi is due to testify about the ECB’s outlook on economic and monetary developments and the consequences of Brexit to the Economic Committee in the European Parliament, and this speech will be closely watched by investors, to gain more information on the strength of the single currency.
Gold
Gold prices closed at the lowest level in nine months on Friday, as expectations for higher U.S. interest rates continued to cloud the demand outlook for the precious metal.
Safe haven demand for gold has been hit since the U.S. presidential election amid expectations that increased fiscal spending and tax cuts under the Trump administration will spur economic growth and inflation. The precious metal has also been weighed down by bets that a rate hike by the Fed in December is a near certainty.
In the week ahead, metal traders will be paying close attention to Friday’s U.S. nonfarm payrolls report for November as well as data on U.S. economic growth and manufacturing for fresh indications on the likelihood of a December rate hike.
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WTI Oil
Oil prices fell sharply on Friday amid uncertainty over whether the Organization of the Petroleum Exporting Countries can reach an agreement to cut production and prop up markets.
U.S. crude oil settled down $1.97 or 4.11% at $49.55 a barrel from its previous close on the New York Mercantile Exchange. It was the largest one day decline since September 23. But WTI still ended the week up 0.81%, after trading in a range between $45.77 and $49.20 a barrel.
OPEC is to hold a meeting in Vienna this Wednesday, aimed at finalizing the details of a proposed output cut, which it is hoped will reduce a global supply glut that has pressured oil prices lower for more than two years. The producer cartel is attempting to get its 14 member states, along with non-OPEC member Russia, to implement coordinated production cuts.
US 500
Early holiday promotions and a belief that deals will always be available took a toll on consumer spending over the Thanksgiving weekend as shoppers spent an average of 3.5% less than a year ago, the National Retail Federation said on Sunday.
The NRF said its survey of 4,330 consumers, conducted on Friday and Saturday by research firm Prosper Insights & Analytics, showed that shoppers spent $289.19 over the four-day weekend through Sunday compared to $299.60 over the same period a year earlier.
However, there was a 4.2% rise in consumers who shopped online and a 3.7% drop in shoppers who purchased in a store. The U.S. holiday shopping season is expanding, and Black Friday is no longer the kickoff for the period it once was, with more retailers starting holiday promotions as early as October and running them until Christmas Eve.
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