The dollar is gaining strength after starting off the week Monday morning on a lower note from a risk-on mood. A series of speeches this week, key data out of the E.U. and the G20 summit will likely drive the currency market.
Draghi says he sees Italy deal
In his speech to European parliament Monday, European Central Bank President Mario Draghi said he sees a compromise coming between the E.U. and Italy over the Italian budget.
Draghi also said that trust must be present between the Italian government and the E.U.
As Draghi commented on this and other E.U. issues, the EUR/USD pair fell from 1.136 to 1.134.
His speech is the start of a few this week by central bankers round the world. Bank of England governor Mark Carney will speak later today, and investors will likely listen closely for comments on Brexit.
Federal Reserve Chairman Jerome Powell is set to speak on Wednesday and investors will look to see if he clarifies comments last week that the Fed could pause interest rate hikes next spring.
FOMC meeting minutes Thursday
Following Powell’s speech on Wednesday, the Federal Reserve’s FOMC September meeting minutes are due Thursday.
There will again be some dissection of the topics discussed and any indication of a change in the rate path.
The Fed is almost certainly expected to raise rates at its December 18-19 meeting.
Key data: U.S. PCE and Eurozone CPI
We’ll get an indication of the amount of money consumers are spending when the October personal consumption expenditures for the U.S. come out Thursday.
The core PCE, which excludes food and energy, is expected to remain at 2% YoY. Personal income is expected to grow 0.4% compared to 0.2% in September. We could see the dollar falling if those estimates miss.
The Eurozone consumer price index – a key indicator of inflation – is due on Friday. The November CPI is expected to fall to 2.1% growth YoY compared to 2.2% the previous month. The core figure is estimated to remain at 1.1% growth.
G20 Summit to end the week
The highly anticipated G20 Summit in Buenos Aires, Argentina will be held Friday and Saturday.
Leaders from the world’s most powerful economies will be on site to discuss various issues, but the most watched discussion could be one that’s not on the agenda.
President Trump and Chinese President Xi Jinping are set to meet on the sidelines of the summit to discuss trade relations between the two countries.
In addition to trade relations, we’re expecting some discussion between Trump and leaders of oil-producing nations ahead of the OPEC meeting in early December.