This weekend was certainly the quietest in a while with little market-moving news.
That lack of news has been echoed through the overnight session and as we open up in Europe a very familiar sight is on show. The US dollar is running higher across the board as investors and traders – who had let the currency weaken towards the end of last week – now choose to pick up the greenback.
With the upcoming Thanksgiving holiday, liquidity is likely to tighten and the US dollar is a decent place to park cash over the extended weekend. Bets on the Federal Reserve hiking interest rates at their December 16th meeting continue to be made as well, adding to the US dollar’s lustre. The currencies that the USD has predominantly been winning against are those that are intrinsically tied to commodity markets. The rates table below will be able to show you the weakness that we are currently experiencing in CAD, ZAR, AUD and NZD markets this morning.
There is little new news in commodities; the sector is still making its way through the mire of low global demand for its wares whilst simultaneously making allowances for a rush of supply that has recently come on line. The continued weakness in commodity prices is an issue that will dominate markets into 2016 in our estimates and, the inflation issue apart, stands therefore as a major obstacle to strength in these currencies.
In the past few weeks we have been given little reason to chat about AUD, NZD and the like because of their recent ability to stand up to a resurgent dollar. The weakness that we have seen this morning will be welcomed by central bankers in Canberra and Wellington given the preponderance to jawbone their respective currencies lower as best they can.
Commodities are doing the heavy lifting today but comments from members of the Reserve Banks of Australia and New Zealand as well as the Bank of Canada will likely target the relative strength of their currencies. As for today, the data calendar is rather quiet with markets seemingly happy to back the US dollar into Thursday’s festivities.