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Forex: Caution reigns

Investors remain cautious during this shortened trading week for the US markets as we near Thanksgiving celebrations and a week that is usually known for low trading volumes. Whilst this marks the build up to the festive season, markets are still shrouded by concerns over security in some of Europe’s major cities and at the same time focus remains on US data which disappointed a little yesterday with a lower than expected manufacturing PMI and new home sales. Meanwhile US Treasury 2 year yields continue to rise indicating heightened chances of a rate hike from the Fed in three weeks time.

Today’s thin economic calendar sees the second estimate of US GDP released at 13.30 GMT and then consumer confidence expected to rise to 99.5 from 97.6 which could be dollar supportive if this recoups the 100.0 level, but it will be interesting to see if the terror attacks in Paris have had a knock effect for consumers across the pond. Before then there is the German IFO data at 9.00 GMT which is expected to dip a little and could move EURUSD lower to test the 1.0600 level again.

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