• Dollar trades in a consolidative mode in post-holiday trade The dollar index stuck to a narrow range in thin trade following the US Thanksgiving Day holiday. With a relatively light calendar today as well and the US trading day to end early, the action in the markets could remain subdued. However, it is the end of the week (and almost the month), so repositioning and profit taking could cause some volatility.
• Overnight, Japanese household spending unexpectedly fell in October for a second consecutive month, even as unemployment continued to decline touching its lowest level since May 1995. The data stressed the difficulty Premier Shinzo Abe faces in persuading companies to increase wages and undermined BoJ Governor Kuroda’s confidence that the tightening job market will lead to wage gains and boost consumption. The core national CPI for October fell at the same pace as in September, matching market expectations of a 0.1% yoy drop.
• Today’s highlights: During the European day, the main event will be the 2nd estimate of the UK’s Q3 GDP. The forecast is for the revision to confirm the initial estimate. The slowdown from Q2 shown in the first estimate was primarily driven by weakness in the construction and the manufacturing sectors. However, unlike the first estimate, here we will get details on the expenditure subcomponents, which we expect to show that growth was mainly driven by domestic demand, mainly private consumption. The employment report for September showed strong accelerating wages, which may have boosted consumption more than expected. Therefore, I see the possibility for an upward revision. This could strengthen the pound a bit.
• From Eurozone, we get the final consumer confidence index for November. Even though the figure is expected to confirm the preliminary reading, this indicator is usually not a major market mover.
• In Sweden, we get retail sales for October. The figure is expected to show a slowdown to 0.2% mom, from 0.7% mom in September. Since April the actual rate has been falling short of expectations. This comes in contrast with the Riksbank’s view that expansionary monetary policy is supporting the continued improvement of the Swedish economy. Having that in mind and that the ECB looks willing to expand its stimulus program at its next week policy meeting, the Swedish central bank might also have to reconsider the magnitude or effectiveness of its current policy approach. As a result, SEK could come under renewed selling pressure.
• Norway’s retail sales for October are coming out as well. Expectations are for a rebound in October after two consecutive months of contraction. This could reduce the risk of a more serious downturn. The country’s official unemployment rate for November is expected to have remained unchanged at 2.9%, but the net change in employment is forecast to have continued increasing. It has been doing so since October 2014. These data could strengthen somewhat NOK, which has been supported also from the rebound in oil prices in the last few days. However, the overall trend of USD/NOK remains to the upside in my view, especially as the probability for a rate hike by the Fed in December continues to increase. As a result, I would treat any possible setbacks as providing renewed buying opportunities.
• The US markets will close early tomorrow due to the Thanksgiving Day holiday, as such, the US trading session will be relatively light as no indicators are coming out.
• We have no speakers on Friday’s agenda.