All eyes on Ukraine peace talks as Thanksgiving thins out this week’s data

As the market re-prices the chances of a 0.25% interest rate cut in the US in December, all eyes are on the EURO-positive Ukraine peace talks. At the moment, ‘talks’ is all we have - but the fact that ‘talks’ are occurring is a step in the right direction.

GBP: GBP/EUR is hitting resistance around 1.1400 level ahead of the UK budget on 26th November which will be the key river for GBP. If there are any further positive developments on the Ukraine peace plan, the EURO will receive a boost, especially against a weakening USD and GBP.
GBP/USD reaching the lower end of recent ranges near 1.3050.

European natural gas prices have fallen below to a lowest since May, boosting Europe’s terms of trade and offering relief to its struggling manufacturing sector. This has led to the euro's terms of trade index rising to its highest level of the year – a clearly positive development for EUR.

EUR: EURUSD is trimming losses on Monday, following a sharp decline last week. The pair is trading near 1.1540 after bouncing at 1.1490 on Friday. Data released by the German IFO revealed that the business climate deteriorated in November, but the impact on the Euro has been minimal so far.

Analysts are a little surprised to see EUR/USD still languishing not far from 1.1500 which could be caused by investors being more comfortable expressing euro-positive views through other currency pairs (such at Swiss franc) than EUR/USD.

USD:  On the other side of the Atlantic, Fed President John Williams’s dovish comments triggered positive market mood, which continues driving rates on Monday and underpins the common currency’s recovery, while refreshing hoped of further interest rate cuts in the months to come. This sent USD Index down from multi-weeks highs.

The odds for a quarter-point rate cut after the Fed’s December 10 meeting have increased to 75%, following Williams’ comments, from around 40% one week ago.

Elsewhere:
Japanese officials are concerned by the rapid and one-sided depreciation of the JPY, but for now the rise of USDJPY is slowing down, aiming at a stable point. A combination of fiscal policy shifts, monetary policy delays, and geopolitical uncertainties are some factors that has underpinned JPY weakness with potential intervention only acting as a limited counterbalance.

The US Dollar is trading flat against Canadian Dollar, around the 1.4100 level, after failing to break above 1.4130 on Friday. The pair is looking for direction on a doleful trading session on Monday, weighed down by a mild appetite for risk.

This weeks data:
Today: EUR: Lagarde’s Speech

Tomorrow: USD: Producer Prices & Retail Sales

Wednesday: NZD: Policy and interest rate decision + Price Data AUD: Inflation data EUR: Lagarde’s Speech

Friday: JPY: CPI data EUR: Germany’s Sales and CPI CHF: GDP release CAD: GDP release

Current rates: EURUSD 1.1537 GBPEUR 1.1347 GBPUSD 1.3093 USDCAD 1.4108 USDJPY 156.74 USDAUD 1.5510 EURCAD 1.6277 EURAED 4.2375