IFX Market Report: Friday 1st October 2021

The Greenback exhibited its strength once again yesterday as global market sentiment deteriorated. The safe-haven US Dollar has steadily gained momentum over the last week “fuelled by the US Treasuries’ rally on the back of expectations that the Federal Reserve will start to taper bond purchases over the coming months”. The US Dollar Index (DXY) managed to spike from “intra-day lows at 94.12 during the early US trading session” and regained “lost ground” and returned to the “94.40 area, approaching year-to-date highs at 94.50”.

EURUSD this morning trades cautiously after falling for four consecutive sessions this week. Reports suggest that the Euro remains “depressed amid divergence between the ECB and US Fed’s stance on tapering and optimistic economic data. ECB President Christine Lagarde considers inflation issues as transitory and opts for the dovish monetary policy stance”. Adding to the Euro’s troubles is high energy prices, and the knock-on effect that this may slow down the economic recovery, push inflation higher, and impose a negative impact on investment decisions. With a packed economic calendar today, EUR traders will be looking to the latest Eurozone Markit Manufacturing PMI and Core Inflation Rate for further direction.

EURUSD opened Thursday already weak at 1.1603. As selling pressures mounted, the pair dropped into the 1.15 range, finally closing the day at 1.1577.

Despite bettering its position yesterday, Sterling is still very much at risk to making further losses against the Dollar. After starting Monday above 1.3700, Cable opened Thursday at a disappointing 1.3450. GBPUSD then went on to close slightly above that mark at 1.3471.

GBPEUR also improved on Thursday. After reaching fresh lows in the week the pair opened the day at 1.1592 and was able to surpass the 1.16 handle at the close, finishing the day at 1.1635.

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