The euro got totally pounded again during last week as Austria decided to lock itself down. There have also been rumors coming out of Germany that the same thing could happen there, so that obviously works against the value of the EU economy.
Moreover, the European Central Bank seems to be stuck in a dovish mood, so if there is a major differential between the ECB and the Fed, it makes sense that the US dollar continues to gain ground against the common currency.
US economic data will be released next week in three key data on Wednesday: durable goods orders for October, the first estimate of GDP for the third quarter, and the personal consumption price index (PCE). Inflation data from the PCE price index will be of certain interest to investors. The US Dollar Index and US Treasuries rose earlier this month due to a stronger-than-expected CPI. If annual PCE continues to rise, a similar market reaction will ensue.
According to the ECB’s report on Thursday’s monetary policy meeting, the outlook for economic policy is unlikely to be improved. We are also examining the German Gross Domestic Product data for the third quarter. Market volatility should remain modest for the rest of the week due to the Thanksgiving holiday in the US.
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