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Personal income data for November may reflect the lack of federal support. Spending figures may also paint a depressing picture amid the virus’ resurgence. The dollar may decline on the reminder of dire straits yet timing matters, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“Retail sales figures have shown a disappointing drop of 1.1% in expenditure and Personal Spending figures are likely to be a drag as well. After rising by 0.5% in October, economists expect a fall of 0.2% in November. Despite online Black Friday sales, the downbeat mood likely pushed the data lower and that is already one reason to expect some pressure on the dollar.” 

“Personal Income data is also projected to decline. A decrease of 0.3% is on the cards, after a retreat of 0.7% in October – falling short of estimates back then. There is room for disappointment – and not only due to last month’s miss. A weak income figure will likely help justify the $900 billion relief package Congress just passed. It will take time until lawmakers push new legislation under President Joe Biden – if they win control over the Senate. It could add pressure on the Federal Reserve to act sooner than later, weighing on the greenback.”

“The figures are published ahead of the Christmas holiday when liquidity thins out. This could cause an outsized move, especially if both statistics miss estimates. However, durables may surprise to the upside. The figures represent long-term investment, which is influenced by vaccine news rather than the grim virus situation. That could create volatility and choppiness.”