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The US dollar is on the defensive following another quiet overnight session. Tomorrow’sThanksgiving holiday is leaving North American trading floors half empty today despitetomorrow’s very important OPEC meeting. Meeting in Vienna tomorrow, OPEC leaders will make decisions with far-reaching implications from the local gas pump to the oil-dependent budgets of Russia and Iran. Oil prices have fallen from above $100 to the $75 level as US dependence on foreign reserves has fallen to thirty year lows. Saudi Arabia, which has played the role of swing producer balancing the market, will need to decide whether to cut output to stabilize falling prices. The US dollar has seen a new resurgence in the fourth quarter, gaining on currencies of commodity exporting nations such as Australia, Canada and Norway.

Economic data was limited in Asia and Europe with a few policymakers pushing currencies with comments regarding quantitative easing. In Japan, BoJ’s Shirai in a speech said he expects the economy to grow above potential in fiscal 2015 and 2016, causing USDJPY to come down a touch. On the opposite end of the spectrum, the European Central Bank Vice President Vitor Constancio said policy makers in Europe may consider buying government debt next quarter. Initially weighing on EURUSD, the impact was limited. Renewed USD selling began following weaker than anticipated US durable goods orders for October, falling 0.9% over last year, compared to 0.47% the same period in 2013.

Despite weaker than expected Q3 GDP figures, the (once) Great British Pound is trading at two week highs amid some EURGBP selling. Perhaps some month-end rebalancing or some general rebalancing following the comments from Constancio sees the cross rate rising sharply today. This morning’s EURUSD rise could be a little catch up for the euro, riding the coat tails of the weakest US data in quite some time. With Thanksgiving tomorrow and most of the US shut down on Friday, liquidity will be thin so it may not take much to move markets ahead of the month end trades to take place on Friday morning.

The Canadian dollar has found its comfort zone this week, trading within a fairly tight 100 point range since the market opened on Sunday afternoon. Weak retail sales on Tuesday caused a test of the high end of the range but the Loonie has since clawed back those losses amid holiday week range trading. Friday, Canada will report Q3 GDP growth, expected to come in +0.6% and +3.1% annualized. This data will come following the results of Thursday’s OPEC meeting, which will certainly have an effect on the USDCAD rate.

OPEC members are seriously concerned with a collapse in prices as American oil production is up 80% since 2007. Russia, a non-OPEC member, has held meetings with countries like Venezuela, about the possibility of cutting production of their 4 million barrels per day. As western nations continue to hammer Russia with new sanctions, perhaps Mr. Putin can gain some new ground using whatever leverage he has amid the nervous OPEC group. Regardless, the outcome of tomorrow’s meetings will reverberate throughout global markets and participants everywhere should be prepared for some volatility.

Further reading:

US Data: durables mixed, claims disappoint, Core PCE ticks up – USD slides

CAD: Hitching A Ride – Credit Agricole