IFX Market Report: Friday 21st January 2022

Poor economic data from the US forced the Dollar to remain “rangebound on Thursday as this week's upward trajectory of U.S. Treasury yields took a breather”. The number of people in the US filing claims for unemployment benefits spiked sharply last week, signalling that the fast-spreading Omicron variant of COVID-19 is negatively impacting the US jobs market recovery. The US Bureau of Labor Statistics published yesterday that over 286,000 initial jobless claims were filed last week, marking a 55K increase from last weeks revised reading. Continuing Jobless Claims also disappointed, coming in 55K over forecast at 1635K. 4-Week Average Jobless Claims was able to “smooth out some of the volatility in the weekly numbers”, coming in at 231K, an increase of 20K from the previous week’s revised average.

A poor performing Dollar enabled Sterling to capitalize on the day. GBPUSD opened the session at 1.3629 and closed just below 1.3650 at 1.3648.

GBPEUR also caught some upside in yesterday’s session. The pair started at 1.2003 and finished at 1.2038.

Despite a weaker Dollar, EURUSD was still forced to close below where it started. The pair opened at 1.1355 and closed at 1.1338.

On the data front, UK Retail Sales came in well below forecasts this morning, showing retailers to have had their worst Christmas since 1996. After a strong November print, the Office for National Statistics data showed a 3.7% MoM decline in December. Analysts say a “fall in demand for petrol and diesel, due to more people working from home under Plan B rules, also contributed to the slump”. Heather Bovill, Deputy Director at the ONS, noted that “after strong pre-Christmas trading in November, retail sales fell across the board in December, with feedback from retailers suggesting Omicron impacted on footfall”.

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