Dollar continues to rebound against other major currencies this week. Weakness is apparent in commodity currencies, in particular Canadian dollar as crude oil tumbled to near 7 year low. WTI is staying soft below 38 for the moment as markets saw OPEC's move as effectively abandoning the strategy of limiting productions. USD/CAD took out key near term resistance level of 1.3456 and resumed the medium term up trend. Nonetheless, dollar's strength against European majors and yen is limited so far. While EUR/USD retreated from last week's high, there is not change in the near term bullish outlook yet. Meanwhile, USD/JPY is still stuck in familiar range.
Traders mind will remain on central bank activities including RBNZ, SNB and BoE this week. And more importantly, Fed is generally expected to hike interest rate next week. St Louis Fed president James Bullard said that the "negative surprises" of GDP growth and inflation "carried more weight" over the last year and a half, than the "positive surprises on labor market performance". And that was a a reason that led FOMC to keep interest rate near zero. And after Fed's hike, the main variable that Fed will watch is inflation.
Atlanta Fed president Dennis Lockhart said he's "ready for a decision to lift off". He's "satisfied" the criteria set by the Fed to determine when to raise rates "have been substantially met." Meanwhile he didn't expect a move at every meeting and there won't be a "preset path". He also noted that the fears of slowdown in China appeared to be "overstated" and he expected China to growth more slowly but still at a "respectable rate". Looking forward in 2016 and 2017, he will be looking for more "direct evidence of converging to the inflation target".
On the data front, New Zealand manufacturing activity rose 4.2% in Q3. Australia NAB business confidence rose to 5 in November. Japan GDP was finalized at 0.3% qoq at Q3 while GDP deflator was finalized at 1.8% yoy. Japan current account surplus widened to JPY 1.49T in October. UK BRC sales monitor dropped -0.4% yoy in November. UK will release industrial and manufacturing today. Eurozone will release GDP revision. Canada will release housing starts and building permits.