During the Asian session, Japan will release the National Consumer Price Index for November, and the Bank of Japan will release the minutes of the October meeting. Australia will release Private Sector Credit data. Later in the day, UK GDP data and Retail Sales are due. The key report of the day will be the US Core Personal Consumption Expenditure Price Index, which is the Federal Reserve’s preferred inflation gauge.
Here is what you need to know on Friday, December 22:
Economic data released on Thursday showed that initial jobless claims stood at 205,000 in the week ended December 16, a 2,000 increase from the previous week, while continuing claims remained around 1.86 million. A new estimate of Q3 Gross Domestic Product (GDP) showed the economy expanded at a 4.9% annualized rate, below the previous estimate of 5.2%. The Philadelphia Fed Manufacturing Index unexpectedly fell to -10.5 from -5.9 in December. However, these numbers had a limited impact on the US Dollar.
US stocks resumed Santa’s’s rally after pulling back on Wednesday, with major indexes posting gains of around 1%. The 10-year US Treasury yield finished higher, nearing 3.90% after hitting a low of 3.83%, the lowest level in months. Despite higher yields, the US Dollar Index fell and posted its lowest daily close since July, trading below 102.00. The Greenback remains under pressure.
Friday will be a busy day regarding crucial economic data, particularly due to US reports that include the Core Personal Consmainlynditure Price Index, a closely watched inflation indicator followed by the Federal Reserve. Also due are the University of Michigan Consumer Confidence Survey, Durable Goods Orders report, and New Home Sales data. Could weaker inflation data from the US further weaken the Greenback, or would it be the definitive turning point?
EUR/USD is trading near the 1.1000 area with a bullish bias, supported by the decline of the US Dollar. The pair is approaching its highest level in four months.
GBP/USD rebounded from the 20-day Simple Moving Average (SMA) rising toward 1.2700. On Friday, the UK will report GDP data and November Retail Sales. These figures could significantly impact the Pound, which has been one of the worst performers of the week, affected by softer-than-expected inflation figures.
Retail Sales in Canada rose 0.7% in October, below the market consensus of 0.8%, with estimates pointing to relatively unchanged sales in November. USD/CAD dropped below 1.3300, falling to 1.3285, the lowest since early August. On Friday, Canada will report October GDP growth, expected to show a 0.2% advance.
USD/JPY resumed its downside, falling below 143.00. The bias is towards the downside. The National Consumer Price Index is due on Friday, and the Bank of Japan will release the October 30-31 meeting minutes.