IFX Market Report: Friday 24th December 2021

Sterling traded well on Thursday, marking gains against both the Dollar and Euro in the session. Trading action has “subdued” in the lead up to the Christmas weekend and “thin trading conditions are likely to limit the movements in the remainder of the day”.

The US Dollar was boosted yesterday afternoon as the annual Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, jumped to 4.7% in November from 4.2% in October. This reading “surpassed the market expectation of 4.2% and helped the Dollar stay resilient against its rivals in the second half” of the Thursday’s session. Also helping the Dollar was the release of December’s final Michigan Consumer Sentiment, coming in at 70.6. The initial reading was released at 70.4 and November’s final level was 67.4. Given that consumption accounts for 70% of US GDP, this reading is positive for the Dollar because it shows consumers are becoming increasingly confident as the economy attempts to recover from the pandemic.

Despite the positive US data yesterday afternoon, GBPUSD was able to close just above the 1.34 in the session. Cable opened the day at 1.3371 and closed at 1.3401.

GBPEUR also made upside gains on Thursday. The pair started at 1.1803 and impressively closed 1 pip off 1.1850 at 1.1849.

EURUSD in contrast made a loss on Thursday, edging closer to the 1.1300 handle. The pair opened at 1.1328 and closed at 1.1309.

The US also released its weekly jobs report yesterday – printing mixed results. Forecasted at 1820K, Continuing Jobless Claims disappointed the most, printing an actual figure of 1859K. Initial Jobless Claims came out as forecasted at 205K, and Jobless Claims 4-Week Average published a final figure of 206.25K.

On the data front, there are no notable releases until the 30th when the US release their weekly Job report again.

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