IFX Market Report: Monday 11th January 2021

After a tough start to 2021 the U.S. Dollar is making gains against its G10 peers as it advances against both the Pound and the Euro. While the Greenback was disappointed with the headline Non-Farm Payroll figure shedding 140,000 jobs last month instead of adding 71,000 as forecasted, Average Hourly Earnings (YoY) unexpectedly rose to a 7-month high of 5.1%. With the incoming fiscal stimulus likely to underpin employment in the US, market’s have noted that that December’s payroll print is will be somewhat dated. Another boost to the Dollar is the Fed’s lack of action on Treasuries – as they tolerate higher returns, the Dollar is rising as a result.

GBPUSD opened Friday at 1.3573 and was able to trade as high as 1.3635 during the session, but was unable to sustain itself at these levels and dropped as the Dollar picked up some momentum. The pair went on to close the week off at 1.3582.

GBPEUR traded relatively flat on Friday, trading within a 43-pip range. The pair started the day at 1.1099 and closed at 1.1086. Interestingly, reports suggests that Wall Street banks are no longer taking a bullish stance on GBPEUR. Goldman Sachs had been buyers of Sterling and sellers of the Euro, targeting a move to 1.15 on the assumption Sterling would benefit from the signing of a post-Brexit trade deal. But since 24th December, the bank noted they are closing their “trade recommendation to go short” and the pair fell “well short” of their 0.87 target, which they “thought could be achieved once the UK and EU secured a post-Brexit trade agreement”.

Rising US yields and the Fed’s reluctance to act has caused EURUSD to reach 3-week lows this morning, dropping below the 1.22 mark. On Friday, the pair was still trading strong, opening at 1.2228 and closing at 1.2251.

On the data front, with no high importance economic releases, we do have speeches from the BoE’s Silvana Tenreyro, ECB President Christine Lagarde, and Raphael Bostic from the Fed.

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