Dollar Hovers Near a 16-month high as European Currencies Falter, Italy in Focus


The dollar index which measures the greenback against a basket of major currencies climbed to a sixteen-month high of 97.68, benefiting from safe-haven flows. The growing risks from Italy's budget and Brexit deal are sparking flows to the greenback. Moreover, the widening interest rate differential between the United States and other countries is being attractive to investors. Several Fed officials will be speaking today, and market participants will be looking for clues about further interest rate hikes. The USDJPY traded near a six-week high at 114.23, and the USDCAD rose to a four-month high of 1.3250.


The British Pound lost ground against other currencies and was the worst performer across the board, weighed down by higher chances of a "No-deal Brexit." The negative headlines dragged down the pound where the GBPUSD traded at a ten-day low of $1.2827. The EU's Brexit Negotiator Michel Barnier lifted the pound from the lows by stating that the main elements of the deal were ready. However, denial statements drove the pound back to the lows. Market Participants will await the jobs report from the United Kingdom with a focus on the Average Earnings Index.


The Euro dropped against the United States dollar as the standoff between Italy and the EU has put large pressure on the single currency. Today is the deadline for Rome to submit a revised budget plan to the EU. The EURUSD traded at a low of $1.1215, and the EURNZD tumbled to a five-month low of 1.6645.


Major US indices finished sharply lower on declining investors sentiment. The mounting risks from Europe and signs of a global economic slowdown are weighing on investors’ confidence. The Dow Jones Industrial Average futures lost 2.2% to 25398, the S&P500 futures fell 1.7% to 2727, and the Nasdaq futures declined 2.6% to 6841.


Metal prices drifted lower as the dollar extended gains. The gold ounce traded at a one-month low of $1200, and the silver ounce fell to $13.95, the lowest since mid-September.


Oil prices erased earlier gains and fell sharply to post new lows as Trump put pressure on OPEC not to cut supply. WTI and Brent started the week on a strong note, supported by the news that Saudi Arabia will cut its oil exports in December, and OPEC is planning to cut supply in 2019. Oil prices climbed more than 2%. However, oil prices couldn't hold gains following Trump's comments on OPEC production cut plan. The West Texas Intermediate crude futures dropped to a low of $58.70, the lowest since February, and the Brent futures reached a low of $68.90, the lowest since April.

Major Economic Events

GMT Country Event Expectation Previous
19:30 UK Average Earnings Index +Bonus (Sep)  3.0% 2.7%
19:30 UK Unemployment Rate (Sep) 4.0% 4.0%
19:30 UK Claimant Count Change (Oct) 4.3 18.5
19:30 EU German ZEW Economic Sentiment (Nov) -24.2 -24.7
19:30 EU Eurogroup Meetings    
19:30 JP GDP (QoQ) (Q3) -0.3% 0.7%


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