The euro’s bounce against the dollar continued yesterday as stronger GDP data from the US wasn’t enough to compete against a poor consumer confidence reading. If shorts continue to be squeezed and EURUSD crawls higher we could see more pressure on the bears with a move back towards recent highs around 1.2600, especially since the US will start to wind down for Thanksgiving tomorrow. The real test for the euro comes this Friday when CPI data is released, expected to come in at 0.7% where anything higher could really see a pop higher in EURUSD.
For today there’ll be some focus given to sterling with the second reading of Q3 GDP which is due to stay steady at 0.7%. There is also the weekly jobless numbers and Michigan Consumer Sentiment, earlier in the week than usual due to Thanksgiving.
Oil is also going to be an important one to watch as we near tomorrow’s OPEC meeting and already Russia, Saudi Arabia, Mexico and Venezuela have failed to agree on a cut in production this morning ahead of the main meeting. The recent decline in crude prices has generated fierce debate over whether Saudi Arabia are actually driving oil lower to harm US shale producers and are therefore unlikely to implement a cut in production to put a floor under the oil price. But in reality it is in the interests of OPEC not to see oil fall too low so any decrease in production below 30 million barrels a day could see a good bounce for crude. However, we are unlikely to see a dramatic rally back towards $100 as the overall fundamentals of a slowing global economy underpin the negative outlook for crude.