IFX Market Report: Thursday 14th October 2021

The US Dollar weakened yesterday as September’s meeting minutes indicated the Federal Open Market Committee could end their stimulus programme by mid-2022. The release of the minutes showed “officials firming up their plans for the eventual end to the $120B monthly asset purchase programme that has been in place since last year to bolster financial markets and the economy”. Consensus among US policy makers is growing to “taper” bond-buys “soon” as the Fed edges closer to achieving “substantial further progress” towards its “dual goal of inflation that averages 2% and maximum employment”. The official minutes stated that “the process of tapering could commence with the monthly purchase calendars beginning in either mid-November or mid-December”. Fed Chair Jerome Powell said recently at September’s press conference that it would only take a “decent” jobs report for the employment threshold to be met to begin tapering. Despite September’s jobs coming in disappointingly under forecast, Atlanta Fed President Raphael Bostic said in an interview this week that “this should not deter the central bank from moving forward with its policy adjustment next month”.

With the Dollar a touch weaker, Sterling was able to capitalize and make upside gains. GBPUSD started the day at 1.3616 and climbed close to 1.3650, closing the day finally at 1.3645.

GBPEUR also was able to advance higher on Wednesday. The pair opened at 1.1788 and closed at 1.1795. This morning the pair has be able to surpass 1.18 but unable to maintain itself at that range.

EURUSD also showed an improvement in yesterday’s session, but it is important to note that this was “fuelled by the broad selling pressure surrounding the greenback rather than the renewed Euro strength”. The pair started the session at 1.1550 and closed at 1.1567.

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