Dollar remains firm as the financial markets start a new week quietly. The greenback was boosted last week by strong employment that lifted that chance of December rate hike. San Francisco Fed president John Williams said over the weekend that he viewed "the next appropriate step as the start of a process of gradually raising interest rates." Meanwhile, he noted that Fed's decision to stand pat back in October was a "close call". He said that "on one hand, the U.S. economy continues to grow and is closing in on full employment. On the other, in large part due to developments abroad, inflation has remained lower than we'd like." Nonetheless, "an earlier start to raising rates would also allow a smoother, more gradual process of policy normalization, giving us space to fine-tune our responses to any surprise changes in economic conditions."
The economic calendar isn't too heavy this week and we'll expect dollar strength to continue. Sterling was under some pressure after BoE sounded more dovish than expected last week. And the pound would look into job data for some support. Euro is also weak on expectation of further easing by ECB in December. GDP data to be released on Friday will not provide much change to the bearish outlook. The main volatility drive could be a batch of China data and Australian employment.
Here are some highlights for the week:
- Monday: German trade balance, Eurozone Sentix investor confidence; Canada housing starts
- Tuesday: Australia NAB business confidence: China CPI and PPI; Swiss unemployment; US import price
- Wednesday: RBNZ financial stability report; China industrial production, retail sales; UK job data
- Thursday: Australia employment; Eurozone industrial production; US jobless claims
- Friday: German GDP, Eurozone GDP, trade balance; US retail sales, PPI; U of Michigan sentiment