Can USD Extend Its Up-move?

Although recently released FOMC meeting minutes triggered doubts that raising Fed rate too early could harm the US economy, the US Dollar Index (I.USDX) secured positive weekly closing as improvement in Inflation and Jobless numbers, coupled with hawkish tone of some FOMC members, during their public appearances, kept favoring December rate hike speculations. Also, the ECB President, during his testimony, provided strong support to the central bank's readiness in adopting further monetary easing, giving additional harm to the Euro and counter strength to the US Dollar. Moving on, the GBP weakened against majority of its counterparts on negative CPI and higher than expected drop in Retail Sales while the AUD strengthened considerably as RBA, in its recent monetary policy meeting minutes, revealed that it doesn't see any need to cut the interest rate in near-future and a rise in New-Zealand PPI and Retail Sales helped the NZD gain. Moreover, the JPY remained sideways as the BoJ refrained from discussing further monetary easing even if the country's GDP number signaled recessionary pressure.

Looking into the current holiday shortened week, there are fewer but meaningful economic events/releases scheduled for publish that could provide hints to determine near-term market moves. Amongst them, surprise announcement by the Federal Reserve, US Q3 2015 Prelim GDP, Consumer Confidence and Durable Goods Orders become helpful in forecasting the US Dollar trend while German Ifo Business Climate Index and the second estimate of UK Q3 2015 GDP are some other numbers that can continue fueling the Forex volatility.

Fed Announcement And US GDP To Get Market's Attention

While recently released FOMC meeting minute couldn't offer much insight on December rate hike speculations, overall market sentiment, backed by improvement in inflation and job numbers, still favor chances that the Federal Reserve would lift its benchmark interest rate for the first time since 2006. However, this week's wildcard announcement by the Fed and a second estimate of the GDP release would provide clarity on whether the US central bank can lift the rate during its December meeting or there are still some places that could stop it from practicing such a move.

With an uptick in recent Inflation marks, coupled with optimistic labor market details, improvement in GDP number, scheduled for release on Tuesday, can become good news for the USD players. Initial estimation of the Q3 2015 GDP mentioned that the US economy expanded at 1.5% as compared to the previous quarter growth of 3.7%; however, consensus relating to the second estimate favors an uptick in the economic projection to 2.0% GDP growth and may help the central bank in announcing interest rate hike during its December meeting.

The Federal Reserve is scheduled to hold a closed meeting of the Federal Reserve System's Board of Governors on Monday where the board may review and determine the advance and discount rates to be charged by the Federal Reserve Banks. Even if the final announcement is to be made after the meeting and is less likely to deliver any surprises in case of monetary policy change, the central bank would communicate signals relating to its future monetary policy action and may help putting bets on December rate hike.

Recent improvements in US economic indicators could find another support from the upbeat GDP, helping the US Federal Reserve to announce interest rate hike in its much awaited December meeting; however, an indication by the central bank, via its Monday announcement, may become more important to portray medium-term USD moves.

In addition to the top-tier announcements, monthly releases of Existing Home Sales, to be released on Monday, CB Consumer Confidence, scheduled for Tuesday, together with Durable Goods Orders and New Home Sales, up for Wednesday release, are some other economic details that could help determine near-term USD moves. While Monday's Existing Home Sales may print lesser than prior 5.55M with 5.39M mark, the New Home Sales is likely to surpass its previous 468K number with 500K mark. Moreover, the CB Consumer Confidence is expected to improve from its last month's 97.6 to 99.3 and the consensus relating to Durable Goods Orders indicate a reversal from its earlier decline of -1.2% with +1.6% growth together with +0.5% expansion in Core Durable Goods Orders against -0.3% prior release. With majority of these second-tier releases expected to print upbeat numbers, chances of the near-term USD advance become brighter.

German Business Climate & UK GDP To Portray EUR And GBP Moves Respectively

Even if Monday's Flash PMI releases from France, Germany and EU helped pulling back the regional currency a bit from its downside, overall sentiment for the Euro keep remaining bearish after the recently released EU details pushed the ECB President to favor need of additional monetary easing in his testimony last week. However, German Ifo Business Climate, scheduled for Tuesday, becomes important to determine the strength of Europe's largest economy and the chances of additional monetary easing announcement during December meeting. The index is likely printing improvement in German business conditions with 108.3 mark compared to previously released 108.2. Should the business sentiment keep improving, chances of immediate EUR strength can't be negated; however, the overall EUR trend remains weak and is less likely to alter unless upbeat positive readings from major EU numbers which are absent during the week.

Weaker Inflation and Retail Sales, coupled with recently dovish BoE, keep favoring further GBP downside; however, second estimation of the Q3 2015 GDP, scheduled for release on Friday, can become an important indicator to forecast near-term GBP moves. The second estimation is likely to confirm the initial release of 0.5% growth number as compared to 0.7% marked during Q1. Better than expected print of GDP can remove recent pessimism surrounding GBP and can help it advance against majority of its counterparts.

New-Zealand Trade Balance and Japanese Details Are the Rest To Observe

New-Zealand Trade Balance, to be published on Wednesday, Japanese Household Spending, CPI and Unemployment Rate, to be published on Friday, are some other details, other than the mentioned above, to help making Forex market alive.

Having witnessed considerable downside in dairy prices that triggered NZD decline, coupled with Chinese pessimism, the Trade Balance details of commodity dependent economy is expected to print another positive mark for the New-Zealand Dollar. Trade Deficit is likely to shrank to -1000M against -1222M and can help the NZD continue its recent advance; though, broader weakness in commodity markets could continue limiting extensive rise by the Kiwi, as it is nicknamed.

Even if the Bank of Japan recently refrained from signaling further monetary easing, monthly releases relating to Inflation, Household Spending and Unemployment Rate become important for the Japanese central bank in determining future monetary actions. While the Household Spending is expected to reverse prior declines of -0.4% with 0.0% mark, Inflation numbers are likely to keep remaining in negative region and may continue forcing the BoJ for additional monetary easing. Continuous deflation and a weaker household spending may force the Japanese central bank towards further monetary easing and JPY downside; however, safe-haven demand of the Japanese Yen may limit major decline.

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