Despite US investors being on holiday yesterday for Thanksgiving, the dollar has regained a little ground with the rebound coming largely at the expense of crude oil which continued its decline as traders sold Brent and Nymex causing them to plummet to new four year lows. Consumers will be rejoicing, especially since today marks Black Friday for shoppers in the US, a phenomenon that is slowly creeping ever eastwards with UK retailers jumping on the bandwagon. Risk appetite is actually suffering somewhat from the fall in oil prices with energy stocks being hit and for FX markets the commodity currencies, AUD, CAD and in particular NOK, are feeling the pressure. USDNOK has hit a five year high and remains a currency pair that is firmly on the radar of investors looking to play the dollar strength trade.
Already this morning we’ve seen better than expected German retail sales, but this hasn’t done anything to help EURUSD which is drifting lower as I write sitting at 1.2430. An important data release comes at 10.00 GMT this morning when Eurozone CPI is released. This is expected to come in 0.3% y/y, down from 0.4% and one step closer to deflation. Anything higher than expected could see EURUSD have another go at the 1.2500 level, but considering yesterday’s slightly weaker money supply figure and the general malaise in the Eurozone, upside looks limited.