Market Dominated by Dollar Gains
Sterling squeezed out modest gains as the global risk tone improved. The market remained cautious in light of recent setbacks and rising UK Omicron cases. Irish Foreign Minister Simon Coveney stated that there is still some distance between the UK and EU positions on the Northern Ireland protocol which despite having little market impact added to concern, especially with the US pulling back on a trade deal with the UK. The Pound pushed above 1.3300 to the US dollar for most of the day and just above 1.1765 to the Euro.
Eurozone producer prices increased 21.9% in the year to October, up from 16.1% the previously and above forecasts of 19.0%, reinforcing inflation concerns. US initial jobless claims increased to 222,000 in the latest week, below consensus forecasts of 240,000. Continuing jobless claims declined to 1.96mn from 2.06mn and below market expectations of 2.00mn. Atlanta Fed President Bostic stated that there had been a pretty robust recovery in employment and GDP and that he’d be in favour of tapering sooner rather than later if momentum in the labour market in the monthly jobs report continued. He added that he would favour bringing forward interest rate hikes if inflation stays elevated in 2022.
Sterling opens lower, near 1.3280 to the dollar this morning as US gains dominate and the Euro clings to the 1.1765 level.