1. Themes for the Week
– It will be a holiday-shortened week for the US, with Thanksgiving on Thursday. Q3 GDP figures should reassure FOMC about the US economy’s momentum. In addition, we have consumer confidence (Tue) and home sales (Mon & Wed). The Fed will most likely be staging a dovish hike in December – and there might even be some attempt to talk down the USD. It makes sense to play USD longs up to the first week of December but after that, it might be a while before the greenback comes back into focus. Buy rumour (of a hike), sell the fact (of a dovish hike).
– UK Autumn Statement set to tackle fiscal slippage, especially after last week’s public finances numbers. Gbp likely to stay under pressure in the near term.
– ECB still on track to loosen policy at December meeting and this week’s data (preliminary EU PMIs) is expected to reaffirm soft Q4 activity.
– CNY might lose some ground now that it’s in the IMF’s SDR basket. Beyond this, as a longer term theme, the overdue rebalancing of the Chinese economy (from investment- to consumption-driven growth) will be a major drag on the global economy in the coming years. Even China must get accustomed to single-digit growth numbers.
2. Charts in line with these themes
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