US dollar enjoys Black Friday rebound

The US dollar firmed on Friday, as a tepid mood bolstered the appeal of the safe-haven currency.

Meanwhile, trade in the pound is mixed so far this morning, with GBP/EUR sliding to €1.1589 and GBP/USD flat at $1.2081. GBP/CAD has climbed to CA$1.6239, while GBP/AUD and GBP/NZD rally to AU$1.8021 and NZ$1.9407, respectively.

Looking ahead, will downbeat UK retail data push GBP exchange rates lower later today?

What’s been happening?

The US dollar trended higher at the end of last week as a cautious market mood revived demand for the safe-haven currency.

However, these gains proved limited as trade in the ‘greenback’ remained thin through Black Friday, with many US-based traders remaining off following the Thanksgiving holiday.

This uptick in the US dollar placed pressure on the euro on Friday as a result of the strong negative correlation between the world’s most traded currency pairing.

This countered the release of a stronger-than-expected GDP print from Germany. Finalised figures showed German economic growth in the third quarter revised up to 0.4% from 0.3%.

Finally, the pound struggled to find any strong directional bias at the end of last week, with concerns over growing industrial action in the UK offsetting Bank of England (BoE) rate hike bets.

What’s coming up?

Turning to the start of this week’s session, the focus for GBP investors is likely to be the publication of the Confederation of British Industry’s (CBI) distributive trade index.

November’s release is forecast to report a sharp contraction in retail sales volumes, potentially reviving concerns over the UK’s retail sector and pushing the pound lower this morning.

A speech by Federal Reserve policymaker John C Williams will be in the spotlight for USD investors today. If Williams indicates he would support slowing the pace of the bank’s interest rate hikes, then the US dollar is likely to stumble.

However in the meantime, the ‘greenback’ is strengthening this morning as China’s Covid protests weigh on market sentiment.

Meanwhile, in the absence of any notable EUR data, any movement in the euro may be driven by Ukraine developments. Any signs that the conflict is continuing to escalate may punish the single currency.