Weekly Round-Up & The Week Ahead
Head of Corporate Clients
Weekly round-up and a look at the week ahead for EUR, GBP, and USD.
The greenback is posting its worst performance in 12 months as investors raise bets interest rates have hit their peak following better than expected data releases. Asset managers are in line to sell 1.6 percent of their open dollar positions this month, the largest selloff since last November but still remain overweight on dollar in comparison to its peers suggesting a further decline may still be in the offing. The US dollar spot index has reached a 4-month low, steadily declining since November 3rd when the jobs data was released.
Looking ahead for the week the dollar selloff could easily be extended as Consumer Confidence, CPI, GDP, Core Personal Consumption Expenditures and ISM Manufacturing data are all released. GBP/USD trades at its highest point since September 3rd, rising above the 1.2600 handle.
The Autumn Statement delivered last week by Jeremy Hunt emanated one of a recovering economy focused on growth. Today prime minister Rishi Sunak will deliver a speech at the global business summit where he will announce nearly £30bn of long-term investment pledges by international companies, triple the figure raised in 2021, in a bid to showcase Britain’s appeal to global investors and kickstart the economy after the BoE forecast 0% growth in 2024. The BoE themselves have been under scrutiny, The Lords economic affairs committee publish a report today criticising the central banks decision making in 2020/2021, the report highlights ‘complacency’ over inflation and relying on ‘inadequate’ forecasting models. The report goes on to recommend the BoE should adopt individuals from a more varied background to result in ‘diversity of views and culture of challenge’.
Data out of the UK is relatively light this week with the pounds performance determined by external factors. BoE members have a busy week as David Ramsden, Jonathan Haskel, Megan Greene and Andrew Bailey all make speeches.
European nations are resisting plans from Brussels to charge vessels entering their waters for emissions, ministers from seven countries including Spain and Italy, have joined forces in a letter to the European Commission suggesting to pause the plans over fears it risks driving business away from European ports. If the plans are to go ahead, tax revenues from ETS could exceed as much as €11bn.
European data comes thick and fast this week as markets prepare to digest latest CPI, Manufacturing PMI, Unemployment Rate and Consumer Confidence. EUR/USD has benefited from the dollar weakness as the pair breaches the 1.09 handle threating to reach levels not seen since August.
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