Weekly Outlook: 2014, November 23 - 30

Forex Weekly Outlook November 24-28

German Ifo Business Climate, Haruhiko Kuroda’s speeches, US and Canadian GDP data, US Core Durable Goods Orders, Unemployment claims and Housing data are the most important economic releases for this week. Here is an outlook on the highlights coming our way.

Last week, the FOMC Meeting Minutes release showed the Fed is concerned with low inflation but expects firming further out. Since quantitative easing ended, the key issue is the timing of the first rate hike. Some FOMC participants wanted to remove “considerable time” in the statement while others did not. Global economic issues such as the weakening in Europe, China and Japan and their possible impact on the US market, were also discussed. The Fed also noted the US economy continues to improve gradually. The December statement may shed more light on the timing of policy changes.

1. Eurozone German Ifo Business Climate: Monday, 8:00. German business sentiment declined for the sixth month in October, reaching 103.2 after September’s reading of 104.7. Economists expected a smaller decline to 104.6. Growth in the third quarter was worse than expected with a predicted gain of 0.3%. The survey revealed a drop in current conditions to 108.4 from 110.5 in September and the outlook gauge declined to 98.3 from 99.2. Analysts predict business climate will reach 103 in November.
2. Haruhiko Kuroda speaks: Tuesday, 0:00, 3:45. BOE Governor Haruhiko Kuroda will speak in Nagoya and in Tokyo. Kuroda warned inflation could fall below 1% the disappointing GDP release in November showing the economy slid into recession. BOE Governor started to implement the unprecedented asset purchases decided in the last policy meeting, despite Prime Minister Shinzo Abe’s decision to delay a sales-tax increase. Kuroda may provide clues on further easing measures to boost inflation towards the 2% target.
3. US GDP data: Tuesday, 12:30. The US economy grew at a faster pace in the second quarter than estimated earlier. Gross domestic product grew at an annualized rate of 4.2%, 0.2% higher than expected. Business spending turned out better than initially estimated. Corporate profits after tax totaled a seasonally adjusted annual rate of $1.840tn, up 6% from $1.735tn in the first quarter. Personal consumption expenditures rose 2.5% in the second quarter, compared with an increase of 1.2% in the first. Durable goods increased 14.3%, compared with an increase of 3.2% in the previous period. Economists expect GDP to reach 3.3%.
4. US CB Consumer Confidence: Tuesday, 12:30. U.S. consumer confidence edged up strongly in October, hitting a seven-year high of 94.5 from 89 in the previous month amid a further improvement in the Job market raising expectations for higher economic growth. In light of falling gas prices and better job figures, consumer spending is expected to rise in the coming months. U.S. consumer sentiment is predicted to rise to 95.9 this month.
5. UK GDP data: Wednesday, 8:30. The U.K. economy kept growing in the second quarter, expanding by 0.8% as in the previous quarter. The reading was in line with market forecast, rising a revised 3.2% from a year earlier. Economists expect the Ukraine crisis will have negative bearings on the manufacturing sector due to a reduction in foreign demand. However once tensions ease, business confidence and investment will rebound across Europe, and the UK will return to full growth. The third quarter growth rate is expected to be 0.7%.
6. US Core Durable Goods Orders: Wednesday, 12:30. Orders for long lasting goods fell unexpectedly by 1.3% in September, while expected to gain 0.4%. Excluding transportation orders, durable goods orders declined 0.2% and fell 1.5% excluding defense orders. Nondefense new orders for capital goods in September fell 5.4%, while defense new orders for capital goods rose 7.4%. However, the general trend is positive showing a stronger market demand, while aircraft orders tend to be less trustworthy. Analysts expect a decline of 0.4% in Durable Goods Orders and a 0.5% gain in core orders.
7. US Unemployment Claims: Thursday, 12:30. The number of Americans filing claims for unemployment benefits fell last week to 291,000 from 293,000 in the week before. Economists expected a sharper decline to 286,000. The reading continues to suggest an ongoing improvement in the US labor market. The four-week moving average, a more stable gauge, increased 1,750 to 287,500, still showing job growth. Economists forecast 287,000 new claim this week.
8. US New Home Sales: Wednesday, 14:00. Sales of new U.S. single-family homes reached a six-year high in September, rising to a seasonally adjusted annual rate of 467,000. Economists expected an even higher reading of 473,000. August’s reading was sharply revised for the worse to 466,000, indicating the housing recovery remains uncertain. The housing market regained momentum after stalling in the second half of 2013 when mortgage rates soared. Mortgage rates have declined hand in hand with the contraction in the U.S. Treasury debt yields, but slow wage growth weighs on the pace of recovery. Analysts expect new home sales to reach 471,000.
9. Canadian GDP: Friday, 12:30. Canada’s economy contracted unexpectedly 0.1% in August, declining for the first time in eight months, amid a decline in energy and manufacturing activity. Economists expected a flat reading as in the previous month. The disappointing figure suggests pickup has stalled in the third quarter. Manufacturing output fell 1.2%, reversing the 1.2% gain in the prior month. Service industries gained 0.2% for the month, with wholesale trade gaining 0.5% and the finance and real estate sectors both rising 0.3% in August. Retail activity, however, declined 0.1% and transportation and warehouses dropped 0.3%. Economists forecast a 0.4% gain in September.

Fundamental Forecast for Dollar: Bullish

• Debate over the timing and pace of the Fed’s normalization path is holding the Dollar back
• Yet, a view that hikes will come ‘eventually’ is still a dramatic contrast to counterparts aggressively easing

Attachment 10869

From a fundamental perspective, the Dollar’s interest rate backdrop seems to be mired in debate over the timing of the inevitable first hike. Technically, many of its pairings have extended to multi-month or multi-year highs with large boundaries looming just ahead. And, perhaps most condemning for momentum is the ‘market conditions’ consideration of a seasonal liquidity drain for the financial markets for the US-based Thanksgiving holiday. Despite all of these factors, however, the Greenback is more likely to extend its stretch of volatility – and perhaps even extend its drive – as the market appreciates its ‘relative’ appeal.

In a vacuum, the Dollar’s fundamental bearings have grown mixed as of late. Employment figures still show improvement on payrolls, but wages and participant are struggling to catch traction. Sentiment indicators are leveling off after broadly climbing to multi-year highs. Housing data is starting to tremble and manufacturing readings have slipped. A tempered pace of growth would be a concern if it weren’t for the reality that the United States’ peers are in far more troubled circumstances.

Nowhere is the disparity in performance playing to the Greenback’s favor more than with monetary policy. Cooler global winds, the FOMC’s softer tone on perceived inflation threats and a thinly disguised desire not to upset financial markets has kept Fed from solidifying near-term rate forecasts. The markets are certainly unsure about the path of rates as Eurodollar and Fed Funds futures (used to hedge interest rates) project the first hike around September or October of next year. The pace thereafter is seen as very conservative. Yet, the September FOMC forecasts still stand – the central bank made an effort to say its view was unaffected by the October market correction, unlike investors’ view – and the Primary Dealers survey conducted by the New York Fed both maintain a mid-2015 or June move is still most likely.

As vague as the Fed’s hawkish path is, it is nevertheless ‘hawkish’. That contrasts dramatically from its major counterparts. The Bank of Japan has upgraded its open stimulus program back in October, while the 3Q recession and expected delayed tax hike add to forecasts. China offered up an unexpected upgrade of its own with the first interest rate cut in two years. And, the European Central Bank is on a path of steadily growing accommodation with a full-blow, government bond-centered program seeming not far away. These are the United States’ largest economic counterparts and their respective currencies the Dollar’s most liquid foils. Their descent indirectly lifts the US currency.

The influence that this relative monetary policy perspective (along with its growth, return and other fundamental implications) has over the Forex market – much less the Dollar – can keep the volatility fires burning for the asset class through the coming week. That is remarkable as the US-based Thanksgiving holiday period often breaks the transmission of risk trends and quiets the capital markets. With the persistent turmoil and pace of policy changes from the rest of the world, the financial system may override the seasonality effect of Thanksgiving. And, even if traditional assets like equities settle; the FX market is far more responsive to ‘mon pol’.

As our attention is set on the most productive fundamental theme (rate / stimulus forecasts) though, we must not write off the threat that an ill-turn in ‘risk’ poses. Given the state of leverage, participation, portfolio balances and asset prices; sentiment can be extremely mercurial. Should confidence bend, we are in for a far deeper well of market adjustment will follow…with heavy Dollar gains.

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Fundamental Forecast for Japanese Yen: Bullish

• Japanese Recession, General Election May Yield Victories for “Abenomics”
• Yen May Rise as Firming US Data, Year-End Flows Weigh on Risk Appetite

Attachment 10870

The markets responded with relative indifference to what might’ve been expected to be volatility-inspiring news-flow out of Japan last week. Third-quarter GDP figures showed the economy sank back into recession. This triggered Prime Minister Shinzo Abe to dissolve the lower house of the Diet and call a snap election for mid-December to win a mandate for delaying next year’s sales tax increase.

The Yen largely acted as if nothing happened, with prices continuing to drift higher against the US Dollar at the same measured pace seen over the last three weeks. For its part, Japan’s benchmark Nikkei 225 stock index oscillated in a narrow range having set a seven-year high.

Such complacency seems to reflect a market that was amply primed for what was to transpire. Indeed, data from Bloomberg shows media mentions of a possible sales-tax hike delay began to build as early as three weeks ago. Furthermore, investors seem rather sanguine about the whole ordeal.

This seems to make sense. Doubling the sales tax from 5 to 10 percent was a central policy fixture of the DPJ administration of Yoshihiko Noda, Mr. Abe’s predecessor. The Prime Minister shrewdly allowed the first phase of the increase – from 5 to 8 percent – to take effect this year. He probably figured that he could claim a deficit-fighting victory if the economy took the move in stride or score a win against the DPJ if it didn’t.

The latter seems to be playing out and Abe has dutifully called an election in response. His aim is surely to use the onset of recession to trash the DPJ’s economic stewardship and secure a broader grip on power. Given the distinctly expansionary nature of “Abenomics”, it seems hardly surprising that the markets are not perturbed by the prospect of giving the current administration a freer reign.

External factors may disturb the calm however. US economic data began to gather upward momentum relative to consensus forecasts once again last week. More of the same as consumer confidence, home sales, and durable goods orders figures cross the wires in the days ahead might fuel speculation that the Fed will move sooner to deliver its first post-QE3 interest rate hike. That may set off risk aversion, pushing the Yen higher amid liquidation of carry trades funded in terms of the perennially low-yielding currency.

Seasonal forces may amplify this dynamic. While risk appetite flourished in 2014, the generally accepted expectation of on-coming Fed stimulus withdrawal surely casts doubt on more of the same next year in the minds of investors. That may fuel a desire to book profits on risk-sensitive exposure as the year-end holiday cycle gets underway, securing yearly performance numbers ahead of what might be tougher times ahead.



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Fundamental Forecast for Pound: Neutral

• British Pound: Swaps Show Weakest BoE Rate Forecast in 6 Months
• GBP/USD Outside Day Reversal; Bigger Resistance Slightly Higher

Attachment 10871

GBP/USD may face a more meaningful rebound in the week ahead as the Bank of England (BoE) highlights the risk of overshooting the 2% target for inflation, while the Federal Reserve remains reluctant to move away from its zero-interest rate policy (ZIRP).

With the BoE scheduled to testify in front of the Parliament’s Treasury Select Committee next week, the fresh batch of central bank rhetoric may heighten the appeal of the British Pound should Governor Mark Carney continue to prepare U.K. households and businesses for higher borrowing costs. Even though the BoE Minutes showed another 7-2 spit at the November 6 meeting, it appears as though there’s a greater dissent within the Monetary Policy Committee (MPC) as the faster-than-expected erosion of economic slack raises the risk for above-target inflation. In turn, we may see a growing number of BoE officials scale back their dovish tone for monetary policy, while the Fed may further delay its normalization cycle amid the subdued outlook for U.S. inflation.

The preliminary 3Q U.S. Gross Domestic Product (GDP) report may serve as another fundamental catalyst to drive GBP/USD higher as market participants anticipate a downward revision in the growth rate, while the core Personal Consumption Expenditure, the Fed’s preferred gauge for inflation, is expected to grow an annualized 1.4% after expanding 2.0% during the three-months through June. As a result, central bank Chair Janet Yellen may largely endorse a more neutral tone for monetary policy going into the end of the year, and 2015 rotation for the Federal Open Market Committee (FOMC) may further dampen the appeal of the U.S. dollar as central bank hawks Richard Fisher and Charles Plosser lose their vote.

With that said, GBP/USD may make a larger attempt to break out of the narrow range on the back of hawkish BoE commentary along with a series of dismal U.S. data, and we would also like to see a topside break in the Relative Strength Index (RSI) as the oscillator retains the downward momentum carried over from the previous month.



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Fundamental Forecast for Australian Dollar: Bearish

• AUD/USD Suffers Intraday Volatility Yet Remains Above 2014 Low
• Scope For Gains Questionable As Elevated Volatility Caps Carry Demand
• Downside Risks Centered On Recent Lows Near The 0.8540 Mark

Attachment 10872

The Australian Dollar witnessed another week of intraday volatility, yet limited follow-through. Local economic data once again proved uneventful for the currency, amid well-anchored RBA policy bets. Indeed the latest Minutes reiterated the central bank’s preference for a “period of stability” for rates and offered few fresh insights into policy makers thinking.

Looking to the week ahead; local Capital Expenditure and New Home Sales data headline the domestic economic calendar. Rampant speculative lending in the housing market has been a concern for policy makers and has created a reluctance to cut rates further. However, the rather volatile upcoming home sales data is unlikely to materially alter the rate outlook. Similarly, it would likely take a significant surprise to the Capex figures in order to change policy bets. This in turn could continue to leave the Aussie to take its cues from elsewhere.

One of the biggest threats to the currency remains the potential for a further pick-up in implied volatility. Measures like the CVIX are near their peaks for the year suggesting traders are anticipating some large price movements amongst the major currencies. Such an environment generally bodes ill for the high-yielding currencies, who stand to outperform in low-volatility settings.
Meanwhile futures positioning suggests the wave of short-selling has turned into a trickle. Yet it remains off the extremes witnessed last year, suggesting more room may exist in the trade.



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Fundamental Forecast for Gold: Neutral

• Gold Nears Change of Behavior Line
• Gold Bounce Stalls Sub-1200, US Dollar Pullback Warning Intact for Now

Attachment 10873

Gold prices are higher for a third consecutive week with the yellow metal rallying 0.8% to trade at $1197 ahead of the New York close on Friday. The advance comes on the back of dovish rhetoric out of the ECB and a surprise move from the PBOC to further ease monetary policy. Although recent fundamental developments are becoming increasingly supportive for gold, near-term the rally may be at risk as prices hold just below the 2014 open.

Gold prices stretched into fresh three-week highs on Friday after the People’s Bank of China made a surprise rate cut to its benchmark interest rates in an attempt to further support economic growth. The central bank lowered one year deposit rates by 25 basis points to 2.75% while one year lending rates were slashed by 40 basis points to 5.6%.

The announcement comes just as ECB President Mario Draghi renewed the central bank’s pledge to combat slow inflation in the region. In comments made at the European Banking Congress on Friday Draghi cited, “We will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us.” He went on to note that if further risks to the outlook materialize, the ECB remains posed to, “altering accordingly the size, pace, and composition of our purchases.” More accommodative monetary policies are generally supportive for gold as expectations for faster inflation stoke demand for the yellow metal.

With that said, the key event risks for the week ahead surrounds the Swiss Gold Referendum, where a ‘Yes’ vote could substantially change the composition of the Swiss National Bank’s balance sheet. The central bank would be forced to increase its holdings of the precious metal with the new guidelines, which could amount to a net CHF 66B in new purchases. Beyond the Swiss vote, the advance 3Q U.S. Gross Domestic Product report may also boost the appeal of bullion amid expectations for a downward revision in the growth rate, and the precious metal may remain well supported in the week ahead on the back of a weaker U.S. dollar.



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NASDAQ forecast for the week of November 24, 2014, Technical Analysis

The NASDAQ had a slightly positive week, but at the end of the day it’s really not that big of a deal. After all, we managed to break a little bit higher, but the market seems to be running out of steam as we had initially had such a parabolic move higher. We believe that pullbacks will be looked at as value, and that’s probably the best way to get involved in buying this market. With no interest in selling, this market is far too strong at this point in time.

http://www.youtube.com/watch?feature...&v=xHVN1rDGInk

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S&P 500 forecast for the week of November 24, 2014, Technical Analysis

The S&P 500 as you can see broke higher, testing the 2060 region. The market looks like it’s ready to continue going higher, and the pullback should represent value. We are buyers of this pullbacks as the market is most certainly bullish, and therefore is a most impossible until imagine shorting this market. After all, all US indices are very bullish of the moment, and without a doubt impossible to sell. The S&P 500 of course isn’t any different, and as a result we continue to be “long only.”

http://www.youtube.com/watch?feature=player_embedded&v=KGod6vjpjfs

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Gold forecast for the week of November 24, 2014, Technical Analysis

The gold markets broke a little higher during the course of the week as we continue to try to build a little bit of a base. The $1200 level above is resistive, and we think that there is plenty of resistance above as well. That being the case, we feel that longer-term traders will be better served looking for resistive candle in order to start selling again. We do not have it at this point in time, so we believe that longer-term traders will probably step away from this market for the time being.

http://www.youtube.com/watch?feature=player_embedded&v=Pgps-NpDe0Y

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USD/JPY forecast for the week of November 24, 2014, Technical Analysis

The USD/JPY pair rose during the course of the week, testing the 118 handle. That being the case, we feel the market is ready to go higher and that pullbacks will continue to be buying opportunities. The market should head to the 120 level, which of course is the next large, round, psychologically significant number. We have no interest whatsoever in selling this market as the US dollar is so strong, and of course the Bank of Japan is working so hard against the value of the Yen.

http://www.youtube.com/watch?feature=player_embedded&v=TyP3pcXKBWY

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USD/CAD forecast for the week of November 24, 2014, Technical Analysis

The USD/CAD pair tried to rally initially during the week, but then found enough resistance of the 1.13 level to turn things back around and form a little bit of a shooting star. The shooting star of course suggests that the market wants to go little bit lower, but quite frankly there is a bit of support below so we are not comfortable shorting this market. At this point time, we are looking for the market to continue pulling back slightly, and then buying supportive candles as they appear.

http://www.youtube.com/watch?feature=player_embedded&v=qFXtNehGdzc

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NZD/USD forecast for the week of November 24, 2014, Technical Analysis

The NZD/USD pair initially fell during the course of the week, but found enough support to bounce and form a little bit of a hammer. That hammer of course suggests that the market could bounce a little bit from here but we recognize that the 0.80 level above is resistive, and that the trend is most certainly to the downside. We are simply waiting on a resistant candle in order to continue selling this market which should go much lower based upon week commodity prices and a central bank in New Zealand that is trying to bring down the value of the currency.

http://www.youtube.com/watch?feature=player_embedded&v=Y06Ullcaabs

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GBP/USD forecast for the week of November 24, 2014, Technical Analysis

The GBP/USD pair fell initially during the course of the week, but as you can see found a little bit of support below in order to form a stubby little hammer. We believe that a bounce could be coming, but quite frankly there’s so much resistance above that we think this bounce will end up being a nice selling opportunity in a market that is most certainly negative. We like selling the British pound, and we believe that the US dollar will continue to be the strongest currency in the Forex world.

http://www.youtube.com/watch?feature=player_embedded&v=AaV_JUeFFUU


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EUR/USD forecast for the week of November 24, 2014, Technical Analysis

The EUR/USD pair initially tried to rally during the week, but as you can see the area above the 1.25 level continues to be far too expensive, and as a result it appears that the market is ready to continue going lower. With that, we feel that a break down below the lows again would send this market much lower and that would be a nice selling opportunity. We believe that the market will then go down to the 1.2050 level, and then perhaps even lower than that. We still maintain that rallies are selling opportunities.

http://www.youtube.com/watch?feature=player_embedded&v=aeauvLujQEQ


the source

The U.S. dollar fell to three-week lows against the Canadian dollar on Friday following the release of stronger-than-forecast Canadian inflation data, while an unexpected rate cut by China’s central bank and higher oil prices also boosted the commodity exposed Canadian dollar.

USD/CAD fell to lows of 1.1191, before pulling back to 1.1231 in late trade, off 0.63% for the day.

The Canadian dollar was boosted after Statistics Canada reported that the annual rate of inflation rose to a one year high of 2.4% in October, up from 2.0% in September and compared to expectations for an unchanged reading.

The robust data was seen as increasing the likelihood that the Bank of Canada would have to adjust expectations while making monetary policy decisions.

The loonie, as the Canadian dollar is also known, received an additional boost after China’s central bank unexpectedly cut interest rates for the first time in more than two years on Friday.

The move came in response to recent signs of a slowdown in the world’s second-largest economy.

Oil prices moved higher following China’s rate cut, which fuelled hopes for increased demand for raw materials, including oil.

Oil prices also found support amid growing expectations that the Organization of the Petroleum Exporting Countries may decide to curb production at its upcoming meeting next week.

Oil prices have been falling since June pressured lower by concerns that global production will outstrip demand.

In the week ahead, the U.S. is to release a string of economic reports on Wednesday ahead of Thursday’s Thanksgiving holiday, including a look at unemployment claims and durable goods orders. Tuesday’s report on Canadian retail sales and Friday’s data on economic growth will also be in focus.

Tuesday, November 25

• Canada is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The U.S. is to release revised data on third quarter gross domestic product and a report on consumer confidence.

Wednesday, November 26

• The U.S. is to release a flurry of data ahead of Thursday’s holiday, including reports on durable goods orders, unemployment claims, personal income and spending, as well as reports on new and pending home sales and revised data on consumer sentiment.

Thursday, November 27

• Markets in the U.S. are to remain closed for the Thanksgiving Holiday.
• Canada is to publish data on the current account.

Friday, November 28

• Canada is to round up the week with its monthly GDP report.

the source

Gold prices rallied to a three-week high on Friday, after China’s central bank unexpectedly cut interest rates for the first time in more than two years.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery rose to a session high of $1,207.60 a troy ounce, the most since October 30, before settling at $1,197.70 by close of trade, up $6.80, or 0.57%.

On the week, gold prices rose $12.10, or 1.01%, the second consecutive weekly gain.

Futures were likely to find support at $1,173.90, the low from November 19, and resistance at $1,216.50, the high from October 30.

Gold prices rose on news that the People's Bank of China cut its benchmark one-year deposit rate by 25 basis points to 2.75% and trimmed its one-year lending rate by 40 basis points to 5.6%.

The move came in response to recent signs of a slowdown in the world’s second-largest economy.

Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.

Meanwhile, European Central Bank President Mario Draghi reiterated on Friday that the central bank is ready to expand its stimulus program to raise inflation and inflation expectations as quickly as possible.

Draghi also warned about weak growth in the euro zone, saying that no improvements are expected in the coming months.

The ECB's current stimulus program includes purchases of asset-backed securities and covered bonds, though markets are keeping a close eye out for plans to announce purchases of government debt, a stimulus tool known as quantitative easing.

Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.

Despite Friday's upbeat performance, gold prices are likely to remain vulnerable in the near-term amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.

In the week ahead, the U.S. is to release a string of economic reports on Wednesday due to Thursday’s Thanksgiving holiday, including a look at unemployment claims and durable goods orders.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers significantly increased their bullish bets in gold futures in the week ending November 18.

Net longs totaled 60,307 contracts, up 35.7% from net longs of 38,763 in the preceding week.

Also on the Comex, silver futures for December delivery climbed 25.8 cents, or 1.6%, on Friday to settle the week at $16.39 a troy ounce by close of trade.

Prices hit a daily peak of $16.60 an ounce earlier Friday, the highest level since October 30.

The December silver futures contract tacked on 8.0 cents, or 0.48%, on the week, the second straight weekly advance.

According to the CFTC, net silver longs totaled 745 contracts as of last week, compared to net shorts of 1,983 contracts in the preceding week.

Elsewhere in metals trading, copper for December delivery inched up 1.2 cents, or 0.4%, on Friday to settle at $3.031 a pound by a close of trade.

Prices rallied to a session high of $3.077 earlier in the day, before paring gains towards the end of the session, as traders weighed whether a surprise rate cut in China would translate into an increase in demand for the industrial metal.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Despite Friday's gains, Comex copper prices shed 1.5 cents, or 0.49%, on the week, amid ongoing concerns over the health of the global economy.

Copper is sensitive to the economic growth outlook because of its widespread uses across industries.

According to the CFTC, net copper shorts totaled 1,304 contracts as of last week, compared to net shorts of 1,664 contracts in the preceding week.

the source

The euro was sharply lower against the dollar on Friday after comments by European Central Bank President Mario Draghi indicated that it is moving closer to implementing quantitative easing measures to shore up the euro area economy.

EUR/USD was down 1.19% to two-week lows of 1.2391 late Friday and ended the week with losses of 1.04%.

The drop in the euro came after Draghi warned that inflation expectations were declining to levels that were very low and said the ECB is ready to expand its stimulus program to raise inflation and inflation expectations as quickly as possible

“We will continue to meet our responsibility, we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us," Draghi said.

“If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases,” he added.

The annual rate on inflation in the euro area was 0.4% in October, well below the ECB’s target of close to but just under 2%.

The single currency also weakened against the yen and the pound, with EUR/JPY down 1.52% to 145.97 and EUR/GBP falling 0.98% to 0.7912 in late trade.

Draghi’s warning came as China’s central bank unexpectedly cut interest rates for the first time in more than two years on Friday. The move came in response to recent signs of a slowdown in the world’s second-largest economy.

Demand for the dollar continued to remain underpinned after the minutes of the Federal Reserve’s latest meeting indicated that officials believe the economic recovery is strong enough to withstand external threats to growth.

However, the minutes offered little additional clarity about when rates could start to rise. Markets are currently expecting the U.S. central bank to start raising rates sometime around September 2015.

In the week ahead, investors will be looking ahead to Friday’s preliminary report on euro zone inflation. The U.S. is to release a string of economic reports on Wednesday ahead of Thursday’s Thanksgiving holiday, including reports on unemployment claims and durable goods orders.

Monday, November 24

• The Ifo Institute is to release its report on German business climate.

Tuesday, November 25

• The U.S. is to release revised data on third quarter gross domestic product and a report on consumer confidence.

Wednesday, November 26

• The U.S. is to release a flurry of data ahead of Thursday’s holiday, including reports on durable goods orders, unemployment claims, personal income and spending, as well as reports on new and pending home sales and revised data on consumer sentiment.

Thursday, November 27

• In the euro zone, Germany and Spain are to release preliminary data on consumer price inflation. Germany is also to produce data on employment change and consumer climate.
• Markets in the U.S. are to remain closed for the Thanksgiving Holiday.

Friday, November 28

• The euro zone is to release what will be closely watched preliminary data on the consumer price index as well as a report on the unemployment rate, while Germany is to release data on retail sales.

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