IFX Market Report: Friday 2nd December 2022

The dollar continued to weaken yesterday as investors digested the FEDS announcement that they will calm interest rate hikes and potentially bring them back down as early as 2024.

The dollars' recent strength has been driven by a number of factors including the Ukraine war, energy crisis, interest rate hikes and factors that have driven investors out of other currencies such as poor budget planning and fundamental data, such as inflation and GDP figures.

In times of crisis the dollar is used as a safe haven currency by investors therefore can be very volatile. To put that into perspective it was only in January this year that GBPUSD was trading at 1.3750 but fast forward to September this year, the pair touched 1.03, the lowest level since 1984.

However a mixture of better than expected data, interest rate corrections and government planning have seen risk sentiment fall back into the markets and the pound is now trading around 1.2250. Whilst the Euro, which fell below parity in September, is trading at 1.05.

The US is also the gauge for the global economy, so yesterday's news which included better than expected GDP figures, improved consumer spending, and a fall in jobless claims helped the major currencies pull back against the dollar.

Business sentiment in Europe is also up as positive consumer figures backed by high employment are encouraging people to spend on the high street. This coupled with inflation figures falling for the first time in 17 months gave investors some confidence away from the safe havens.

This afternoon could see some market movement with US non farm payrolls at 13.30 the highlight.

GBPUSD currently resides at 1.2250

GBPEUR currently resides at 1.1650

EURUSD currently resides at 1.0525

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