UK: Weekly FX Market Update 5 December
GBPUSD had a positive week gaining 1.5%.
Sterling strengthened following Bank of England Economist Pill and his hawkish comments about ‘doing more’ on interest rates in coming meetings.
Non-Farm Payroll on Friday was bullish, allowing the USD to claw back some lost ground.
This week the main economic highlights will be Services Purchasing Managers Index (PMI) released today (Monday) and Consumer Inflation Expectations on Friday.
With the US economy still growing strongly, can Sterling continue its bounce from the September low at 1.0360?
The Single Currency had a good week against the US$, strengthening by 1.4%.
ECB President Lagarde continued her commitment to reducing inflation.
Eurozone CPI was released lower than expected at 10%.
Economic data releases include Retail Sales released today (Monday) & Revised GDP (Tuesday).
Can the Euro continue its recent gains against the US$?
ECB President Lagarde speaks twice this week. Will she continue her hawkish mantra?
US GDP was better than last month’s +2.6% gain, showing a 2.9% growth rate.
However, the Dollar weakened due to Fed Chair Powell saying that the time for moderating the pace of rate hikes may come as soon as December.
Non-Farm Payrolls data showed a tight US labour market. The headline release showed 263k new jobs were added in November, with average hourly earnings growing 5.1% on an annual basis against last month’s 4.6% rate.
This week the market will consider what the strong jobs report means for US interest rates and looks ahead to the release of the Producer Price Index on Friday.
Could the Fed be forced to hike rates more aggressively than previously thought and could this encourage more US$ buying?
China’s zero-tolerance covid policy has been attracting huge negative sentiment as the Chinese population demonstrate against it and criticize Premier Xi’s policy.
There is some evidence that covid restrictions are being relaxed.
The market has started to trade in a ‘risk on’ manner at times. Could this continue?
Events for the weekend ahead:
Mon Dec 5
01:45 EUR ECB President Lagarde speaks
09:30 GBP Final Services PMI
10:00 EUR Retail sales
15:00 USD ISM Services PMI
Tue Dec 6
03:30 AUD Cash rate Decision/RBA Statement
Wed Dec 7
00:30 AUD GDP QoQ
10:00 EUR Revised GDP QoQ
15:00 CAD Bank of Canada Interest Rate Decision
Thu Dec 8
00:30 AUD RBA Bulletin
12:00 EUR ECB President Lagarde Speaks
Fri Dec 9
09:30 GBP Consumer Inflation Expectations
13:30 USD PPI
15:00 USD Preliminary UoM Consumer Sentiment