IFX Market Report: Monday 15th November 2021

The Dollar is trading strong this morning, still finding gains from last week’s “surprisingly” high inflations figures, which in turn “prompted investors to advance their bets for a Fed rate hike”. Arguably the main contributor to the Greenback’s upside is the markets “higher-for-longer” narrative around current elevated inflation. With that said, the Dollar is being well supported by better-than-expected Labour data. Continuing Jobless Claims came out under forecast at 2160K, and Initial Jobless Claims also fell, printing a final number of 267K. Also, the announcement of President Joe Biden's “landmark” infrastructure spending package has aided the Dollar. The infrastructure legislation proposes $550B investment in new federal expenditure over the next eight years in order to upgrade highways, roads and bridges, and to modernise city transit systems and rail networks. Given that this is the largest federal investment in the country's infrastructure for decades, President Biden said the US had taken “a monumental step forward as a nation” and “did something that’s long overdue”.

While GBPUSD experienced a volatile session on Friday, the pair closed close to where it opened. Cable started at 1.3404 and finished at 1.3410.

As the Dollar grew stronger on Friday, EURUSD depreciated, falling to almost 16-month low at 1.1433. The pair opened at 1.1453 and closed at 1.1443. Investors are becoming “increasingly bearish on the outlook for the Single Currency as the European Central Bank appears unlikely to change its extremely dovish policy settings in the near term against the backdrop of a slowing economy.”

GBPEUR in contrast made gains on Friday. The pair started at 1.1703 and closed at 1.1719.

On the data front, it’s a quiet schedule today. At 10:00 the Eurozone releases September’s Balance of Trade, followed by speeches from Christine Lagarde and Luis de Guindos of the ECB.

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