XM Group - Analytics

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    European Session – Quiet session due to US Thanksgiving holiday and light economic calendar

    Currency markets were relatively quiet on Thursday as there was a light economic calendar and US markets were closed for the Thanksgiving holiday. This curbed activity and kept trading volumes low. Equity markets though saw more action, especially in Europe where Germany’s DAX index was up 1.5% and the Stoxx Europe 600 rose 0.8%.

    The euro traded in a small range against the dollar. It touched a key support level at 1.0600 early in the European session before recovering to 1.0620, helped higher by the publication of the Eurozone M3 money supply growth which grew more-than-expected by 5.3% year-on-year.

    However the main driver of the euro will be the risk of the upcoming ECB meeting next week. There are growing market expectations that the central bank will ease monetary policy further, especially after a media report released on Wednesday about the ECB considering two-tiered deposit rate cuts. Meanwhile, as the ECB is expected to cut rates, the Federal Reserve is expected to raise rates in December.

    As a result, the dollar remains firm relative to other major currencies. Some weak US data released on Wednesday will not likely deter the Fed from hiking rates next month.

    Sterling fell half a US cent from the European open to test 1.5065 before bouncing back to 1.5121. Focus will be on Friday’s UK growth data. The second estimate of third quarter GDP is due.

    The dollar barely moved against the yen and hovered around 122.55 yen. Near term risk for this pair lies in Japanese CPI data tomorrow and the US nonfarm payrolls report next week (December 4).

    In commodities, gold was trading a bit higher than yesterday, holding above $1070 per ounce. Crude oil trimmed some of yesterday’s gains to fall down to $42.64 a barrel.

    Risk Warning: Forex, Commodities, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you fully understand the risks involved and do not invest money you cannot afford to lose. Please refer to our full Risk Disclosure.

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