GBP reaches almost 2-year highs vs the EUR. Markets will play close attention to European PMIs and Fed minutes out today.
January 5, 2022
GBP/USD 1.3547 GBP/EUR 1.1981 EUR/USD 1.1307 USD/CAD 1.2713 EUR/CHF 1.03403 EUR/SEK 10.2491 EUR/NOK 10.0044 EUR/DKK 7.4381 USD/ILS 3.0932 AUD/USD 0.7241 NZD/USD 0.6804 USD/SGD 1.3551 USD/JPY 115.92 USD/CNH 6.3726 USD/INR 74.3375 EUR/ILS 3.498 GBP/ILS 4.1886 USD/ZAR 16.0156
GBPUSD gained over yesterday’s session reaching highs of 1.3557 at the end of the London session before dipping to trade in the 1.3535 region as we print. It seems this rally was fueled by a prolonged rise in government bond yields amid growing expectations about the Bank of England's rate hike. Markets will be paying close attention to the inflation figures out the of the US and UK to help determine the future direction of the pair.
Boris Johnson spoke yesterday stating that the UK can weather record Covid cases without the need for further restrictions. He warned that the weeks ahead will be challenging with the NHS being under growing strain, however feels the rules currently in places are sufficient.
The FTSE gained 1.63% over yesterday’s trading.EUR
EURUSD traded relatively steady over yesterday’s session, reaching lows of 1.1272 and highs of 1.1320 before recovering to sit in the 1.1304 region as we print. The number of daily coronavirus cases in the US and Europe both reached new all-time highs on Tuesday.
EURGBP dipped to lows of 0.8335 during the Asia session before recovering slightly to sit in the 0.8345 region as we print down 0.7% since the start of the week. Although the BoE arguably did not handle well its hike messaging late last year, as of now it is a pack leader when it comes to openness to monetary tightening. EURGBP trades close to 2-year low.
European stocks rallied over yesterday’s trading with the Euro Stoxx 50, CAC and DAX gaining 0.83%, 1.39% and 0.82% respectively.USD
The dollar spot index was mixed over yesterday’s session dipping during London hours before rebounding into the US and Asia session. Minutes from the Fed policy makers’ meeting last month are out this afternoon – investors will be eying for details on the timing of the Fed hike along with the shrinking of its balance sheet. At present, markets expect asset purchases to end in March opening the path for hikes, however the minutes released later today will shine more light on the timing of this.
US stocks were mixed with the Dow Jones gaining 0.59% whilst the S&P and Nasdaq dipped 0.06% and 1.33% respectively.ASIA/PACIFIC
Most Asian stocks dipped due to further concerns about rising rates, with the Hang Seng and CSI 300 falling 1.86% and 1.01% respectively whilst the Nikkei rallied just 0.1%.
The Japanese yen trades near its lowest point since January 2007 as treasury yields climb, with USDJPY sitting in the 115.94 region as we print.
Bitcoin trades around 46k and oil dipped following the OPEC+ meeting.ILS
The Shekel gained further against the Dollar with USDILS reaching lows of 3.0808 before recovering to now sits in the 3.0954 region as we print.
Minutes from the BoI meeting acknowledge that the Israeli economy’s process of recovery from the crisis continues however there are still challenges to economic activity.Data & Events
Germany – Services and Composite PMIs
Italy - Services and Composite PMIs, CPI
Spain - Services and Composite PMIs
France - Services and Composite PMIs
Eurozone - Services and Composite PMIs
US – Fed minutes
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