IFX Market Report: Thursday 25th November 2021

The US Dollar gained momentum on Wednesday, marking gains against both the Pound and Euro. The Dollar is still riding high from President Joe Biden’s decision to keep Jay Powell Chair of the Federal Reserve. With Powell continuing his role as Fed Chair, most economists have “put forward their expectations for monetary policy normalization” from the US central bank. While the Fed have already announced its tapering plans, some traders are speculating that the tapering process could be “accelerated”. This is boosted by the recent speeches of Fed members Raphael Bostic, James Bullard, Richard Clarida, and Christopher Waller; as all are “seemingly warming to a more aggressive taper”. The markets are now “pricing in an 80% chance of at least one hike by the Fed meeting in mid-June 2022” and also “pricing in the potential for three or more interest rate increases by the end of next year”. With the Dollar Index also reaching its highest levels in 16-months, it’s likely the Greenbacks upside will persist.

GBPUSD slipped below the 1.3350 mark yesterday, hitting a fresh year-to-date low in the session. Cable opened at 1.3363 and closed at a 1.3330.

GBPEUR traded flat on Wednesday but remains in a strong position. Back above 1.19, the pair started at 1.1908 and finished at 1.1907

EURUSD suffered a tough session yesterday, dropping below the 1.12 handle by the close. EURUSD opened at 1.1221 and closed at 1.1196.

On the data front, Germany released its latest Q3 GDP Growth Rate and Gfk Consumer Confidence at 07:00 this morning. GDP Growth came in at 2.5% with a revised previous of 10%. December’s Gfk printed a final figure of -1.6. At 12:30 ECB President Christine Lagarde will be giving a speech, followed by the Bank of England’s Jonathan Haskel at 14:05. BOE Governor Andrew Bailey will also be speaking at 17:00.

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