IFX Market Report: Thursday 2nd December 2021

During his testimony this week Federal Reserve Chair Jerome Powell “surprised market players… when tweaking his tone about inflation”. Powell said to US lawmakers that “it’s probably a good time to retire that word (transitory) and try to explain more clearly what we mean” when talking about inflation. This in turn gave the Greenback a solid boost and stopped US Treasury’s from declining. After Powell’s comments, many “economists in Europe say the European Central Bank needs to do the same”. Dramatically rising consumer prices in have been concerning to financial markets, reaching above (and beyond) global central banks’ targets. Thus, many “money managers are sceptical about whether easy monetary policy is the right approach” – especially in the Eurozone. Data released earlier in the week showed inflation had reached historic highs in the month of November, printing a final figure of 4.9%. The ECB’s policy is to work towards a 2% target over the medium term, and the central bank has claimed “it expects inflation to come down throughout 2022”.

GBPEUR traded in a tight range yesterday, opening at 1.1746 and closing at 1.1752.

EURUSD also experienced little activity on Wednesday. The pair started at 1.1311 and closed at 1.1322.

Despite GBPUSD being able to reclaim the 1.33 handle on Wednesday, “concerns over the Omicron COVID-19 variant and Brexit issues continue to limit the pair’s upside”. Cable opened that at 1.3285 and closed at 1.3306.

At 10:00 this morning the Eurozone will publish its final Unemployment Rate for October, forecasted to come in at 7.3%, with a previous of 7.4%. Then in the afternoon from 13:30, the US releases its weekly Labour Report consisting of Continuing Jobless Claims, Initial Jobless Claims, and Jobless Claims 4-Week Average. Then from 16:00, Fed members Quarles, Barking, Bostic, and Daly will all be speaking.

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