THE DOLLAR REMAINS STRONG FOR THANKSGIVING

As the US moved towards Thanksgiving the dollar has remained strong and gone on another tear higher into the holiday period in the US. Stronger than expected data on Durable Goods Orders and the flash Manufacturing PMI saw Treasury yields spike higher and the dollar followed suit. This has pulled the greenback through key levels against the euro and the yen, whilst the negatively correlated gold price has broken it key $1200 support. These huge breaks have taken the dollar to even more overstretched levels and whilst the move is strong, it will be interesting to see the reaction of traders to some dollar negative news now. The more overbought the dollar becomes, the more decisive the retracement could be once the elastic starts to snap back. The FOMC meeting minutes have done little to change any expectations of rate hikes, with the market already prepared for rates to rise “relatively soon”. For today though, with it being Thanksgiving public holiday in the US there is likely to be reduced trading volumes however this could mean uncertain trading moves and potentially increased volatility in thin markets. For the UK, reaction to finance minister Phillip Hammond’s first financial update has been relatively supportive on sterling. With Gilt yields ticking slightly higher, the pound has held its ground against a storming dollar.