IFX Market Report: Friday 1st April 2022

After a strong run of form on Wednesday, the Euro struggled yesterday, marking losses against both Sterling and the Dollar. The Euro was hit hard after Eurostat reported the Unemployment Rate at 6.8%, which remains in the mid of market consensus at 6.7% and the prior figure of 6.9%. Meanwhile, bets on an interest rate hike by the European Central Bank (ECB) are rising higher. Soaring inflation in the Eurozone is compelling the ECB’s policymakers to raise the interest rate for the first time after the COVID-19 pandemic. The German annual inflation has climbed to 7.3%, the highest reading in more than four decades. While the Consumer Price Index (CPI) in France has landed at 5.1% and the inflation number in Italy has reached 6.7%

In regard to the Greenback, the US Dollar Index (DXY) is up and has reclaimed 98.00 comfortably despite a minor slippage in Core Personal Consumption Expenditure (PCE) inflation. The yearly Core PCE inflation landed at 5.4%, slightly lower than the estimate of 5.5% but higher than the prior print of 5.2%. The demand for safe-haven assets such as the Dollar improved yesterday “after the optimism in the Russia-Ukraine peace talks faded, underpinning the Greenback against the Shared Currency”.

Sterling was able to make subtle gains against the Dollar on Thursday. Cable opened at 1.3135 and closed at 1.3145.

After a tough session Wednesday, yesterday the Pound was able to retract some of the losses made in the previous session against the Euro. Starting at 1.1760, GBPEUR finished Thursday at 1.1760.

EURUSD in contrast made a loss on Thursday as Dollar strength proved too much for the Euro to handle. The pair opened at 1.1170 and closed at 1.1100.

On the data front, the market’s main focus today will be US Non-Farm Payrolls. With a reading last month of 678K, this month the figure is forecasted at 490K.

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