IFX Market Report: Tuesday 8th February 2022

With a lack of economic data releases, and investors having a better sense of global central bank policy after last weeks meetings, Monday proved to be yet another relatively calm session in the foreign exchange markets. The most volatile of the G10 currencies yesterday was the Euro. Despite finishing practically where they started the day, GBPEUR and EURUSD saw heightened price action in the day. Both pairs traded over a 55 pip range in session as investors continued to speculate over what the European Central Bank’s next monetary policy move will be after Lagarde finally changed her rhetoric on inflation. After acknowledging the mounting risks caused by surging Eurozone inflation, the ECB opened the door to “an interest rate hike later in 2022 and said that a March 10 meeting will be crucial in deciding how quickly the central bank would wind down its long-running bond-buying scheme, a cornerstone of its stimulus efforts”. It’s likely as speculation grows, the Euro could see increased volatility in the lead up to the ECB’s next policy meeting.

GBPUSD had an uneventful start to the week – opening at 1.3536 and closing at 1.3534.

GBPEUR in contrast moved a lot on Monday. Despite the volatility seen by the pair in the session, GBPEUR opened at 1.1840 and closed only 10 pips below at 1.1830.

EURUSD also saw increased activity on the day but closed only 8 pips below where it started. The pair opened Monday at 1.1432 and closed at 1.1440.

On the data front, it’s another quiet schedule this Tuesday. At 13:30, the US will publish its latest Balance of Trade numbers, forecasted at $-83B with a previous of $-80.2B. At the same time, the US will also publish its Export and Import data for the month of December.

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