IFX Market Report: Friday 14th January 2022

After a few consecutive days of volatility, price-action was subdued on Thursday. The US Dollar marked a third straight day of losses yesterday and is “headed for its largest weekly fall in more than a year on Friday as investors trimmed long positions and deemed, for now, that several US rate hikes this year are fully priced in”. With the economic data this week showing US inflation at “its hottest since the early 1980’s” selling conditions have “forced the Greenback through key support against the Euro and Yen in particular, and traders seem content to lighten their bets until a clearer trend emerges”. The US Dollar Index (DXY) as a result is down about 1.14% for the week and on track for its largest weekly percentage fall since December 2020.

In contrast to the Dollar, Sterling “traded above its 200-day moving average on Thursday and is heading for a fourth consecutive weekly gain of more than 0.5%”. Sterling was able to mark another session of gains against the US Dollar yesterday – opening at 1.3733 and closing the day at 1.3737.

GBPEUR traded in a tight range on Thursday as both the Euro and Sterling enjoyed a run of form. GBPEUR opened at 1.1977 and closed at 1.1978. The Euro is up by more than 1% this week so far and has “punched out of a range it held since late November”.

EURUSD went on to trade at levels not reached since early November yesterday, going as high as 1.1483 in the session. The pair opened at 1.1466 and closed at 1.1468.

On the data front, Friday’s a packed schedule. Both UK GDP 3-Month Average and GDP YoY came out better-than-expected this morning. 3-Month Average was released at 1.1% and the YoY figure came in at 8.0%. At 09:00, German Full Year GDP Growth for 2021 was in line with forecasts, printing a final figure of 2.7%. At 13:30 this afternoon the US will publish December’s Retail Sales figures, followed by the preliminary Michigan Consumer Sentiment at 15:00.

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