This week, Americans will be thinking about all of the things that we can be thankful for. On the first day trading day of this shortened Thanksgiving week, the US dollar is stronger against all of the major currencies. Dollar bulls, in particular, have a few reasons to be thankful for this holiday seasoning. To start, the Federal Reserve has been very clear that barring any unforeseen shocks, further easing may not be necessary. US data is starting to take a turn for the better and the Dow is trading near a record high. Americans are enjoying the combination of growing portfolio values and low-interest rates and the hope is that this will translate into a healthier holiday shopping season. Black Friday deals are starting earlier than usual this year, which may help extend the period of demand. Fed Chairman Powell will be speaking later this evening and no major revelations are expected. However, Tuesday’s new home sales and consumer confidence reports should be strong as they reflect the positive impact of low-interest rates and housing data. USD/JPY had a very nice run towards 109 and while the pair stopped right at the 200-day SMA, the path of least resistance should be higher.

Meanwhile, EUR/USD fell for the fourth consecutive trading day, coming within a few pips of 1.10. The euro was hit from all sides on Friday (weaker PMIs, ECB comments, and stronger US data) and while business confidence improved according to the German IFO report, the selling pressure remains strong. With that said, the IFO report has not fallen since August which confirms our view that the economy is stabilizing. Auto tariffs are still a risk but the November 14th deadline has come and gone with no updates from President Trump.

In contrast, sterling snapped a 4-day slide to rise strongly against the euro and US dollar. According to the Confederation of British Industry, consumer spending is picking up ahead of the holiday shopping season. This is very encouraging as the CBI index has a strong correlation with the broader retail sales measure. Sterling traders were also happy with the latest polls showing Tories with a comfortable lead over Labour.

The Canadian and Australian dollars pulled back but the New Zealand dollar held steady ahead of a busy trading week. Third-quarter retail sales numbers are scheduled for release from New Zealand tonight followed by the trade balance on Wednesday local time. We’ve been bullish NZD for some time and expect data to reinforce our view. However, the 100-day SMA has limited gains for the past month and NZD finds it difficult to push against a pro-US dollar rally.