The pre-Christmas week was relatively calm on equity markets and brought further strengthening of the US dollar. The calendar for the final week of the year is relatively empty but be prepared for year-end moves which could be quite abrupt.
US data: Pending Home Sales (Wednesday, 3pm GMT) and Chicago PMI (Friday, 2:45PM GMT)
The US reports scheduled for the week are generally second-tier when it comes to market impact. However we have witnessed a substantial rally on the US dollar and traders might want to make sure that the data supports the bullish case. Therefore the reports will be scrutinized.
Oil market: US inventory data (Thursday, 4pm GMT), Rig Count data (Friday 6pm GMT)
Oil prices have rallied substantially towards the end of the year on the back of the OPEC deal. US output could be the main risk for the bull going forward – if the US producers increase the amount of oil they pump, they may negate a positive impact of the OPEC deal on oil prices. Therefore investors will keep an eye on the data on US inventories, output and rig count. Higher rig count should mean more output in few months’ time.
Year-end positioning (Friday)
Final sessions of the year often bring substantial volatility amid reduced liquidity and position squaring by traders and investment funds. Traders should watch carefully instruments where we see a build-up of speculative positions. According to the CFTC reports we see a large amount on net long speculative positions in oil and US dollar while a historically high net short positions can be observed on the Japanese yen and British pound.
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