IFX Market Report: Tuesday 1st February 2022

Markets traded largely flat on Monday as investors await key economic data releases and central bank meetings this week. Little activity in the market saw the Dollar lose momentum on the day and the Euro was able to capitalize, marking rare gains against the Greenback. Better-than-expected inflation numbers from Germany and a robust Eurozone GDP estimate gave the Single Currency a well need boost. However, despite yesterday’s data and rising consumer costs this winter, “the ECB are expected to maintain their monetary policy settings at their meeting this week”. Annual inflation in the Eurozone is currently sitting at 5%, 3% over the European Central Bank’s target. While the ECB’s stance on inflation is proving a hinderance to the Euro, the central bank has forecasted that the rate will “drop back below target in the fourth quarter”.

Following last week’s 1.6% advance, the index’s biggest rally since June, the US Dollar Index (DXY) edged lower on Monday. The Dollar was last week lifted “by growing expectations for US rate hikes after more hawkish than expected Fed (market expectations for four rate hikes by the end of the year rose above 90%), increased demand for safe-haven assets amid growing geopolitical tensions and weak and volatile equities”. This week however, the Greenback has slipped from those multi-month highs and will look to this week’s key data releases for direction.

GBPUSD started Monday at 1.3432 and closed not far off at 1.3420.

GBPEUR also made a loss yesterday – opening at 1.2025 and closing at 1.1981.

EURUSD was able to make subtle gains in the session yesterday as the Euro experienced a rare run of form. The pair opened at 1.1170 and closed at 1.1200.

On the data front, it’s PMI day. At 08:55 Germany released January’s Markit Manufacturing PMI, printing a final figure of 59.8. From 09:00 the Eurozone, UK and US will all release their latest Manufacturing PMI data.

Older posts
Newer posts