After closing the previous week with highs above 108.00, the DXY index consolidated to 107.00 at the start of the session. Higher than-expected US PMI data last Friday, and weaker EU PMI data, supported this move.
It will be a quiet one for US data this week. FOMC minutes will come out on Tuesday, followed by PCE data on Wednesday. Americans will celebrate Thanksgiving this week, leading to US holidays on Thursday and Friday.
EURUSD is trading around 1.0450 this morning, above the record lows of 1.0335 from last week as the single currency recovered from worse-than-expected Eurozone PMI data. Losses were further caused by stronger US PMI data.
HCOB Flash Eurozone Composite PMI fell sharply to 48.1, down from 50.0 in the previous month. This signaled a contraction in the services sector for the first time in 10 months, and a continual downturn in the manufacturing sector.
Market expectations of a 50bps cut by the ECB in December surged, rising to over 50%, compared to less than 20% before the PMI data release.
This week the main data is Eurozone CPI on Friday, with CPI YoY forecasted at 2.3% compared to 2.0% prior.
GBPUSD is at the 1.2600 level, opening the session bullish after reaching lows of 1.2490 at the end of last week.
The pound has been moved by reduced bets that the BoE will cut rates next month. Climbing UK inflation, accelerating to 2.3% in October, leads us to believe that the BoE will remain cautious about future interest rate cuts.
With a lack of data for the UK this week, market makers will use this time to follow policymaker speeches and speculate on interest rate cuts during the December meetings.
