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Which economic events will move the dollar around in the next few days? Here’s a list of potential catalysts.

CPI report (Dec. 12, 1:30 pm GMT)

October’s consumer price readings showed little signs of breaking out, which supported assumptions that the Fed would not be as aggressive with its rate hikes in 2019 as it was this year.

This week analysts expect to see the annualized headline CPI slow down from 2.5% to 2.2% in November, while the core reading is seen to have sped up from 2.1% to 2.2% for the month.

A weaker-than-expected release – especially after a soft NFP event – could drag the dollar lower against its counterparts. Take note, however, that last month’s release only mattered to the dollar for a bit. It didn’t take long before bulls and bears went back to pricing in intraweek trends.

That means y’all gotta be ready with your intraday exit plans if you’re planning on trading this one!

Retail sales (Dec 14, 1:30 pm GMT)

Like in the CPI release, traders barely paid attention to the retail sales figures in favor of pricing in macroeconomic concerns last month.

In case we do see a wiggle or two from the event, then you should know that market geeks expect to see headline retail sales slow down from 0.8% to 0.1% in November. Ditto for the core figure, which is expected to clock in at 0.2% after showing 0.7% growth in October.

Yield and Fed rate hike concerns

With all the hoopla that’s been made over yield curve inversions lately, it sounds like traders have packed their bags and are all but ready to go at the first signs of a recession.

Speculations over Uncle Sam’s growth have gotten stickier as traders look to the U.S.-China trade war conflict for cues on growth trajectory. It doesn’t help that last Friday’s NFP report and a weekend trade release from China both point to the trade war dragging on the economy.

As if economic growth isn’t enough to worry about, traders are also speculating how the latest economic releases and trade war updates will affect the Fed’s hawkishness in 2019. Word around is that we won’t see three more rate hikes next year.

Which way will the winds blow this week? Will we see progress in the U.S.-China trade truce? Or will fears of a recession and a less hawkish Fed keep a lid on the dollar’s gains?

Last Week’s Price Review

The Greenback is currently mixed for the week but a net winner yet again (as of 6:00 pm GMT), so the Greenback will soon be boasting its third consecutive week of net wins.

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

The Greenback started the week with a bout of weakness, likely because of dampened safe-haven demand and/or profit-taking due to news over the weekend that the U.S. and China had agreed to a trade war truce.

The Greenback would later try to bounce back, but as noted in Monday’s London session recap, there was no apparent trigger for the Greenback’s recovery. The pound was slumping at the time because of Brexit-related concerns, though, and the Greenback may have just been feeding off the pound.

At any rate, the Greenback’s recovery was quickly capped and sellers would later began kicking the Greenback lower during the later half of Monday’s U.S. session and until Tuesday’s morning London session.

And the apparent reason for the Greenback’s broad-based weakness was the yield curve inversion of some U.S. bonds, which fueled speculation that the U.S. economy may enter a recession.

Fortunately for USD bulls, cooler heads prevailed, probably because the most reliable signals for a recession, namely the yields of 3-month and 10-year bond, have yet to cross over.

The Greenback also got a noticeable bullish boost when national security adviser John Bolton was stressing the need for legislation to ban imports of products and services rising from U.S. intellectual property during the WSJ CEO Council.

The Greenback may have been getting a boost mainly at the expense of the comdolls, but it’s also possible that the Greenback was pushed higher because of actual safe-haven demand.

In any case, the more USD bulls would join the fray when New York Fed President John Williams gave some rather hawkish comments.

As for specifics, Williams had generally positive things these to say:

“My own view is — I think completely consistent with what Chairman Powell said — is that the U.S. economy is strong, but there are definitely risks on the horizon,”

“There’s a good – like 50 percent chance – that the economy performs faster, inflation picks up a little bit more than we expect, and I think we’re positioned to adjust to that.”

“I expect with the economy continuing to grow nicely above-trend, we’ll see further job gains, further declines in the unemployment rate, and unemployment will edge slightly below 3.5 percent over the next year or so.”

“I do continue to expect that further gradual increases in interest rates will best foster a sustained economic expansion and sustained achievement of our dual mandate goals.”

And remember, he said those after the yield curve inversion fueled expectations for a recession in the U.S.

It’s worth noting, however, that Williams was speaking only in his personal capacity, and not for the Fed as a whole.

The market didn’t seem to mind, though, and the Greenback happily trended higher on most pairs before becoming more mixed after a report came out claiming that Italy has supposedly relented and is planning to revise its budget and send it to the E.U. by next week.

Buying pressure on the Greenback was still notable, though, but the Greenback did show signs of fatigue against the euro and Swissy.

And when word got around that Huawei’s global CFO was arrested in Canada for extradition to the U.S., the Greenback’s price action became even more mixed since the yen also began kicking the Greenback’s butt.

The Greenback’s price action became uniform again when Thursday’s U.S. session finally rolled around since all of the Greenback’s forex rivals began to kick the Greenback in a uniform manner.

And the apparent catalyst was the disappointing ADP report, although there were also a bunch of other disappointing U.S. economic reports.

Anyhow, the Greenback bashing would finally stop when ISM’s non-manufacturing PMI report surprised to the upside.

The Greenback then traded mostly sideways after that and ahead of the NFP report. And when the NFP report was finally released, that showed a downside surprise for jobs growth (+155K vs. +198K expected) and wage growth (+0.2% vs. +0.3% expected), so the Greenback got whupped as a knee-jerk reaction.

However, the Greenback’s price action diverged after that since the Greenback continued to lose out to the euro, the Swissy, and the yen, while recovering against the comdolls, likely because of the risk-off vibes during Friday’s U.S. session.

And in the case of the pound, the Greenback  likely gained ground against the pound because of reports after the NFP report was released that pro-Brexit ministers were threatening to quit because of the backstop solution.