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Get ready for an unusual week of trading! With the holidays thinning out the market and a light economic calendar, we can expect some abnormal price action in the coming days. Will the Santa rally continue? And what’s in store for the US Dollar?
Here’s the lowdown for next week:
Next week’s economic calendar is looking pretty light, and with holiday-thinned trading, we might see limited price action and potential false breakouts. Keep in mind that most trading platforms won’t be up and running on Monday.
Last week saw another positive run for equity prices, with the Dow Jones hitting all-time highs and US Treasury yields dropping. Will Santa stick around on Wall Street this coming week?
The US Dollar Index (DXY) took another hit this past week, falling to monthly lows below 102.00. It’s still moving with a bearish bias, largely due to risk appetite and lower yields. Expectations for Federal Reserve (Fed) rate hikes in 2024 are adding to the Greenback’s pressure.
This week, the Core Personal Consumption Expenditure (Core PCE) rose 0.2% in November, slightly below the expected 0.3%, and 3.2% from a year ago. These figures suggest that inflation is moving closer to the Fed’s 2% target. Next week, we’ll see data on home prices (Tuesday), Jobless Claims (Thursday), and the Chicago PMI (Friday).
The EUR/USD climbed above 1.1000 and faces the challenge of staying above that level next week. The pair closed the week at its highest level in five months. Keep an eye out for Spain’s preliminary Consumer Price Index (CPI) report for December on Friday.
The GBP/USD made modest gains last week but struggled to stay above 1.2700. The Pound was affected by softer-than-expected UK inflation data. Next week, no major UK economic reports are scheduled.
The Japanese Yen had a rough week, especially after the Bank of Japan (BoJ) monetary policy meeting. The USD/JPY made some gains but fell short of the weekly peak, signaling potential downside risks. Keep an eye out for BoJ’s Summary of Opinion, as well as retail trade and industrial production data.
No significant economic reports are coming from Canada, Australia, and New Zealand next week. Both AUD/USD and NZD/USD made solid gains last week with the highest close since July. Price action is likely to continue being driven by USD dynamics.
The USD/CAD dropped below 1.3300, closing at its lowest level since August.