Weekly Market Report: 13th – 16th December 2021

Monday 13th December – On Monday, the Pound started the day in a firm position as investors found some confidence in the currency after the announcement of the rapid booster plan for vaccinations. Despite this, the Pound lost these gains against its rivals later in the day as news about the current spread of Omicron manager to put a cap on any gains. As a result, the Pound finished at 1.171 against the Euro and 1.3213 against the US Dollar according to the Foreign Exchange Market.

 

The Euro dipped at the start of trading yesterday although it did manage to make up for these losses during the afternoon. This is because its negative correlation with the US Dollar caused some level of volatility. Furthermore, it also managed to make gains against its riskier rivals which put the single currency in a strong position.

The US Dollar nudged higher yesterday against a number of rivals as risk-off market mood gave the safe-haven currency a boost. Despite this, a drop in Us Treasury yields placed pressure on the Greenback and that saw it lose ground against the Pound and Euro during the session.

Tuesday 14th December

The Pound experienced some fluctuation on Tuesday but it did manage to eventually make gains following the latest UK jobs data which showed that a recovery had continued beyond the end of the furlough scheme.

However, the speed at which the Omicron variant is spreading is a cause for concern as this could push the economic recovery off track and this placed a cap on the gains. According to the Foreign Exchange Market the Pound finished at 1.1751 against the Euro and 1.3229 against the US Dollar.

The Euro gained ground quickly during the early part of the session yesterday before losing any gains during the afternoon. This was down to its negative correlation with the US Dollar although mixed sentiment around the Euro did weigh heavily on the single currency.

There was some volatility for the US Dollar yesterday as markets readied themselves for the Fed’s interest rate decision. Changes in global risk sentiment also had an impact on the safe-haven currency while investors are still waiting to find out what impact the Omicron variant will have on the economy and its recovery.

Wednesday 15th December

The Pound started Wednesday in a good position as it strengthened at the start of trading following the release of the UK’s CPI which came in at a ten-year high.

This gave the currency a boost although these gains were quickly lost come the afternoon. Economists gave their views on the likelihood of a rate hike and it is believed that policymakers will take caution, especially with the growing threat of Omicron. At the end of trading, according to the Foreign Exchange Market, the currency finished at 1.147 against the Euro and 1.3263 against the US Dollar.

The Euro was mixed during trading yesterday as investors took a cautious approach in light of the interest rate decision from the Federal Reserve. There was also a lack of data and that left the single currency in an uncertain position, causing it to become volatile through the day.

The US Dollar made up some ground during a turbulent day as investors readied themselves for the announcement from the Federal Reserve. Following the decision, the Greenback dropped sharply, even though the bank is speeding up its tapering plans and planning three hikes next year. So, the downside in the currency seemingly came from profit-taking.

Thursday 16th December

After the Bank of England announced an increase in the interest rate to 0.25% on Thursday, the Pound rose.

However, these gains were capped and this is because the currency was still being held back by concerns over the latest news surrounding the Omicron variant. Along with this, the PMI report was also worrying, all of which placed further strain on the currency. At the end of trading, the Pound finished at 1.1754 against the Euro and 1.3323 against the US Dollar according to the Foreign Exchange Market.

The Euro edged lower yesterday as the European Central Bank took a more hesitant stance when compared to the UK and the US. They chose not to alter interest rates but announced that the pandemic emergency purchase programme would come to an end in March. However, the losses were limited as investors grew in confidence based on the decisions that the ECB is making around monetary policy.

It was a quiet day for the US Dollar as it lost ground against many of its rivals even with the Federal Reserve choosing to speed up its tapering plans on Wednesday. This meant that the US Dollar remained fairly motionless through the session.

Friday 17th December

 

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