Imre Speizer, Senior Markets Strategist at Westpac, suggests that the USD index’s price action remains very constructive.
“Fed hike odds now sit at 80%, an elevated reading for a data dependent Fed that will not make up its mind until closer to a meeting that is still a good five weeks away, although it would probably take a lot to offset the recent strong US payrolls report. That said, our impression is that USD positioning is light, markets having trimmed their USD longs and would still prefer to buy dips in the USD near term.”
“There are upside risks to retail sales, and let’s not forget the small matter of the 3 Dec ECB meeting. Draghi appears to be vacillating in recent days on the question of whether the ECB will ease policy further but until that meeting is out of the way markets will likely err on the side of pricing in additional easing.”
“Oct retail sales is the key release in an otherwise typically quiet (shortened by Veterans Day) post-payrolls US schedule this week, the other less noteworthy releases being the JOLTS survey, PPI, prelim Uni Michigan sentiment. Partial indicators flag some upside risk to Oct retail sales, auto sales coming in above expectations and chain store sales firming notably through the month.”
“Possibly of more importance for markets will be the lineup of Fed speakers: Rosengren, Bullard, Lacker, Evans, Dudley and Mester.”