US Inflation and GDP Data Front-Loaded Before Holiday.
Summary:
Holiday Liquidity: US markets close for Thanksgiving on Thursday. Trading volumes typically drop significantly after Wednesday, leading to potential volatility in thinner markets.
Wednesday Data Focus: Key US economic releases have been brought forward to Wednesday. The Core PCE inflation reading and GDP figures will be the primary drivers for the week.
German Inflation: Europe remains active on Friday while the US is quiet. German preliminary CPI data is due and will be a crucial input for the ECB's December policy decision.
Trading volumes are set to decline this week as the US Thanksgiving holiday approaches, creating a distinct split in market activity. The economic calendar is heavily front-loaded, compressing the major US data releases into the first half of the week. Investors will likely look to adjust their positions and complete month-end rebalancing by Wednesday close, as market depth will reduce significantly for the remainder of the week.
Sterling is trading without significant domestic data to provide direction. In the absence of top-tier UK economic releases, the currency will likely function as a barometer for broader risk sentiment and US Dollar strength. Price action may be influenced by corporate flows relating to the month-end rather than fundamental news, making the currency sensitive to the changing liquidity conditions.
The US Dollar focus is concentrated on Wednesday. The market will digest the Core PCE Price Index, which is the Federal Reserve’s preferred inflation gauge, alongside the second estimate of Q3 GDP and Durable Goods Orders. This cluster of data provides the final opportunity for investors to adjust their expectations for the Federal Reserve's December meeting before the holiday period begins.
The Eurozone calendar remains active despite the US holiday. The primary risk event falls on Friday with the release of the German Preliminary CPI inflation report. As a leading indicator for the wider Eurozone, this data point could trigger independent movement in the Euro. The lack of US participation on Friday means any surprise in the data could lead to outsized moves due to the lower liquidity.
Events to Watch This Week:
Tuesday, November 25: US Consumer Confidence
Wednesday, November 26: US Core PCE Price Index (Inflation), US Q3 GDP (Second Estimate) & US Durable Goods Orders
Friday, November 28: German Preliminary CPI (Inflation)
This week requires a careful approach for those managing currency risk. The release of European data on Friday, when US markets are largely absent, creates a specific risk of price gaps in a low-volume environment.
