Thanksgiving week means a slew of data releases Tuesday and Wednesday from the US and perhaps little movement after mid-week in FX markets that still have one eye on the Fed and another on the trend in US tech stocks, Scotiabank's FX strategists Shaun Osborne and Eric Theoret report.

USD mixed versus majors as markets consider Fed policy outlook

"NY Fed President Williams’ dovish comments on the rate outlook Friday (indicating that he saw room for a rate cut in the 'near term') are having an outsized impact on rate expectations. Swaps have moved from pricing in less than 10bps of easing to 20bps this morning. Why? Because as part of the Fed’s senior leadership, his perspective on policy is thought to be closely aligned with Chairman Powell. Williams’ comments are an important signal for the December meeting but it still does not guarantee a cut, given the likely resistance to easing from more hawkish policymakers."

"We had thought that the outcome of the December meeting was more finely balanced than sliding expectations last week suggested, however, and the ongoing focus on the policy outlook should help contain USD gains. Meanwhile, stocks are starting off the week flat in Europe and mixed in US equity futures term. NVDA has steadied but the risk 'all clear' won’t be sounded until the stock can rebound significantly. So far on the session, the USD is trading mixed against the major currencies."

"The JPY is underperforming modestly while the EUR and CHF are relatively firmer. Non-core majors are reflecting a little more volatility, with the ZAR at the top of the overnight performance table while the KRW is the weakest. The DXY itself is trading down slightly on the day with price action still reflecting our view that broader dollar gains may be close to a peak, with the index showing signs of stalling in the low 100 zone, where gains peaked in August and earlier in November. Minor support sits at 99.7 intraday. Key short-term support is 99.0."