IFX Market Report: Monday 11th October 2021

The US Dollar was significantly weaker on Friday as the pace of US jobs growth stalled for a second month in row, raising questions among investors on “whether the Federal Reserve can begin scaling back its enormous pandemic-era monetary stimulus as early as next month”. Fed Chair Jerome Powell had previously stated that a “decent” jobs report “would mean the employment benchmark set forward by the central bank to begin winding down its $120B asset purchase programme would be met”. Friday’s Non-Farm Payroll release showed that only 194,000 jobs were added to the economy, despite the Unemployment rate falling for a third straight month from 5.2% to 4.8%. Given that Non-Farm Payroll was forecasted at 500,000, September’s shockingly poor report “signals that many of the forces holding back employees from returning to the workforce persist, suggesting a rockier path forward for the US economy”. Speaking on Friday US President Joe Biden defended the report claiming that it covered a time when Delta cases were far higher than current levels. He went on to add that “jobs up, wages up, unemployment down. That’s progress”.

Cable started Friday at 1.3593 and was able to capitalize on a weaker USD. GBPUSD climbed above the 1.3600 handle in the session and finish the day at 1.3627.

GBPEUR also gained upside on Friday. The pair opened at 1.1774 and closed at 1.1777.

EURUSD was also able to advance due to Dollar weakness. The pair started the session at 1.1545 and was able to close the week at 1.1571.

Looking ahead to today, Sterling bulls will be focusing on how the latest Brexit issues will unravel. The EU are scheduled on Wednesday to bring forward proposals for reforming the Northern Ireland which some critics fear will cause “a breakdown in relations”. Reports say that the proposals will focus on “easing practical problems with the movement of goods” rather than changing “oversight arrangements”.

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