IFX Market Report: Thursday 8th July 2021

Markets traded relatively flat yesterday as investors awaited the FOMC’s latest Minutes. To the dismay of many, June’s Minutes gave little insight and thus lacked the direction expected from the event. Due to high “uncertainty around the economic outlook” Federal Reserve officials “were not ready to communicate a timeline for scaling back asset purchases”. Bloomberg notes that the June meeting “marked a turn in the central bank’s comfort with inflation risks amid heightened price pressures as the economy reopens from the pandemic. But above all, the minutes show the committee had a lot of questions about how soon labour shortages and supply bottlenecks contributing to inflation would resolve”. The US central bank continued monthly purchases of $80B of Treasuries and $40B of mortgage-backed securities until “substantial further progress” is made on inflation and employment.

Despite opening above the 1.3800 handle on Wednesday, Cable was unable to sustain that position, moving back down into the 1.37’s as the day progressed. GBPUSD opened the session at 1.3809 and closed at 1.3777.

GBPEUR had a rather uneventful day. The pair opened at 1.1674 and finished the session 2 pips above at 1.1676.

Similarly to Cable, EURUSD also took a tumble yesterday. The pair started the session at 1.1829 but quickly came under mounting pressures, finally closing off the day at 1.1799.

On the data front, Germany’s Balance of Trade missed expectations this morning, coming out at €12.6B, despite a forecast of €15.4B. At 13:30, the ECB will be giving their latest Monetary Policy Meeting Accounts. Following this release, focus will turn to this week’s US Labour figures. Continuing Jobless Claims is forecasted at 3335K, while Initial Jobless Claims is expected at 350K.

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