• High expectations for ECB to cut rates
  •  Fed fighting strong dollar
  • EU consumer confidence on the rise
  • Mixed data out of Asia

It is a relatively quiet morning after the thanksgiving holiday, as few countries have economic data scheduled to come out today.  The Eurozone had some mixed data this morning with consumer confidence coming in at higher-than-expected levels, but there are clearly some reservations as the industrial sector confidence and business climate reports came in lower-than-expected. The euro depreciated a fair amount over yesterday and today as the expectation for the ECB to reduce rates significantly has increased and QE in December seems very likely. The slide in the euro could have been worse if not for the good consumer confidence numbers.

The US is sitting on the other side of the fence as the Fed tries to battle a strengthening dollar.  The expectation for a December rate hike is still quite high and has been trying to shift the focus away from the date of the hike to the pace of tightening instead.  The hope is that a gradual increase of rates over time will reduce the appreciation of the dollar.  There is some chance that if the dollar appreciates too much in anticipation of the December rate hike that they could delay the hike further.  Given the comments of late by Fed members and the data that has come out of the jobs market, it seems unlikely that it will be delayed.

Asian markets released some mixed data this morning as China continues to crack down on brokerages that broke the rules.  This has led to several key rule changes and closer monitoring by Chinese officials.  The markets in China continue to slump leading to some significant uncertainty for the Chinese economy and weakening the yuan.  Japan had good jobless rate numbers, but 20 year lows in household spending are muting these results.

EURUSD: Euro is down this morning on mixed data and the increasing expectation of rate reductions in addition to US dollar strength.

GBPUSD: The pound is down again this morning on USD strength.

AUDUSD: Aussie dollar down this morning also on USD strength.

USDCAD: Canadian dollar weakens against the USD significantly, as the USD continues to build steam as December rate hikes are expected and oil prices remain low.