GBP/EUR held onto its hard-earned gains last week, finishing Friday about level with the week prior. The pound is now up by around a cent and a half from the end of September after a streak of strong outings. Both currencies slid by nearly 1% against the US dollar, which ended the week having pared back some of its losses from the last month.
Last week’s US non-farm payrolls crept up to 199k, well above the predicted 180k. With forecasters already having undercooked their JOLTs job openings predictions, the US dollar marched higher as the possibility of the Federal Reserve delivering cuts as soon as March started to look a little more remote.
Meanwhile, American stock indexes were propelled higher by the Michigan economic survey. It wasn’t all rosey for US markets, but consumers reported less concern about inflationary pressures – no doubt a small but potentially significant ray of light for Joe Biden heading into a federal election year.
The US dollar’s gains looked circumspect against those of the Japanese Yen, which raced higher to finish the week around 1.5% up on the dollar. The Yen performed well after markets bet that the Bank of Japan would raise interest rates, just as the decibels were picking up in the West about the potential for cuts.
There were a few crumbs of interesting data elsewhere, but the real big week of data has now arrived. Will policymakers be getting coal or coins in their stockings? We’ll soon find out with the Bank of England (BoE), the Federal Reserve and the European Central Bank (ECB) due to unveil their latest interest rate decisions.
We will also have inflation and unemployment data to unpack, as well as big reads coming out of China. It’s sure to be a vital period.
Here’s what to look out for this week…
Today is very much the calm proceeding the storm, before Tuesday brings UK unemployment figures, the German ZEW Economic Survey, as well as US inflation, both headline and core.
On Wednesday we’ll get UK GDP statistics and US PPI, before markets settle in to watch the Fed’s interest rate decision. Jerome Powell and his fellow central bankers will then offer a light digestif in the form of their always closely-watched press conference.
Andrew Bailey and his Bank of England colleagues then take centre stage on Thursday for their own rate announcement, swiftly followed by Christine Lagarde and co at the ECB.
The week ends somewhat quieter, but there will be overnight attention on Chinese industrial production and retail sales.
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