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US dollar weaker as Thanksgiving weekend starts

Disappointing US data and a more dovish tone from the Federal Reserve minutes allowed the US dollar to weaken yesterday, as US traders prepared for, what has become a four-day weekend these days. It is Thanksgiving Day today. Happy Thanksgiving Day to our US readers, although you’ll probably be too busy to read this anyway. The public holiday means there will be no US trade and that will be followed by Black Friday, where the trade takes place in supermarkets, malls and on the interweb rather than dealing rooms. The GBPUSD rate managed to break above $1.20 for the first time since mid-August and it has remained at $1.2085 this morning. We can tell this is a story of US dollar weakness because the EURUSD rate is also up, at $1.0425 for the first time since July and the USDJPY rate is down to JPY138.60, having been up to JPY142.25 just three days ago. The lack of US data today will leave the USD adrift to some degree.

GBP recovers on positive PMIs

As mentioned above, the pound is being flattered by the weakened USD but it is good to see GBPUSD above $1.20 again. It’s quite nostalgic really. It must be said though, that a full suite of improved Purchasing Managers Indices helped sterling to recover. the numbers in the PMIs weren’t back above the midline of 50, the demarcation between expected growth and expected contraction but they all beat market expectations and mostly matched the previous month. There is also a lot of talk around the markets that the new Cabinet is looking for less flustered than the previous short-term group and that is providing a little confidence in GB PLC. However, we have speeches from at least four Bank of England members today and they do love to knock the value of the pound. So be prepared.

Expect NZD volatility overnight when Retail sales data is printed

The GBPNZD rate is more than a cent up from yesterday’s lows, in line with sterling’s slightly more obvious support and ahead of tonight’s release of New Zealand’s retail sales data. After two quarters of contraction in the NZ retail sector, we are expecting a modest bounce back in this data which would validate the view of the Reserve Bank of New Zealand but further interest rate rises are likely but it doesn’t chime with their view that a recession is imminent. The GBPNZD rate is up to NZD 1.9335 right now, having spiked to NZD 1.9375 yesterday.

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