The US dollar staged a rebound on Thursday against recent advances from the pound and the euro. GBP/USD ended yesterday’s session 0.5% down, while EUR/USD sank by around four-tenths of a per cent after a strong showing after Christmas.
There wasn’t exactly a wealth of data to explain the moves, but perhaps a more general sense that the dollar had become undervalued. Initial jobless claims out of the US came in higher than expected last week at 218k, indicating the economy may be slowing in line with Federal Reserve targets.
In this quiet festive period, however, there is plenty of conjecture and little hard evidence. The year’s macroeconomic releases end tomorrow with UK house prices and Spanish inflation but don’t expect much from this set of data to move markets still yawning from their Christmas revels.
The Japanese yen gained over six-tenths of a per cent against the US dollar yesterday, continuing its strong month. The Polish zloty gave up some ground to the dollar but remains almost 1% up compared to this time last week. The news came as president Donald Tusk announced he would put the Polish state television group into insolvency after accusations of right-wing bias.
The conflict in the Middle East rumbles on amid increased fears that it could spread to the wider region. Israeli officials warned that time was running out to find a solution with Lebanon as skirmishes near the border further complicated the geopolitical picture.
Labour is reportedly working under the assumption that the Conservatives will call a snap general election in May 2024. Shadow cabinet minister Emily Thornberry said an early poll was the “worst kept secret in Westminster”, even though most strategists still believe Rishi Sunak will wait until the Autumn.
Shipping giant Maersk has begun to direct its vessels through the Red Sea once more, a week after pulling out of the route. The Iran-backed Houthi militia had been attacking ships before a US task force entered the region, which accounts for around 12% of global maritime trade.
European stock markets fell back yesterday, albeit only a tick down from multi-year highs. Markets continued to evaluate the ongoing complexities of the geopolitical picture while weighing the risks from potential interest rate cuts next year.
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