IFX Market Report: Friday 13th August 2021

The US Dollar reclaimed its dominance yesterday, making advances on both Sterling and the Euro. Investors became increasingly bullish on Thursday as better-than-expected US economic data was released in the afternoon. Continuing Jobless Claims beat forecasts by coming in at 2866K, and PPI for July came out at 1%. The Greenback also made further gains after reports suggested that “several US Fed officials expected the central bank to announce plans to taper its massive asset-purchase program in September”. Ester George for example, Kansas City Fed President, has noted that “the standard for reducing the bond-buying program may have already been met by the current spike in inflation, recent labour market improvements and the expectation for continued strong demand”. Dallas Fed President Rob Kaplan has said separately that he will “press his colleagues to announce a plan to taper bond purchases” at the September meeting. The US Dollar Index (DXY) remains strong after slipping from the 93.00 handle overnight.

The Euro in contrast had a tough session yesterday, losing further ground against the Greenback. Poor economic data from the Eurozone helped to push the Single Currency to the downside on Thursday. Despite being forecasted at 10.4%, Industrial Production for June disappointed, coming in at a meagre 9.7%. Looking ahead to today, the main focus will be June’s Balance of Trade. Balance of Trade is very important to the EU state “due to its high export of manufactured goods”. Euro bulls are hoping this reading today can bring about some upside – equally, if the reading disappoints, it will likely push the Euro further down.

GBPUSD opened yesterday’s session trading at 1.3870 but came under significant selling pressures as the Dollar improved. Cable finally closed the day off at 1.3832.

GBPEUR in contrast made a loss yesterday. Despite starting the day at 1.1812, the pair fell below the 1.18 handle, closing the day at 1.1793.

EURUSD also made a loss yesterday. The pair started at 1.1742 and closed at 1.1729.

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