Weekly Market Report: 20th – 24th September 2021

Monday 24th SeptemberThe ongoing gas crisis in the UK had a negative impact on the Pound during trading on Monday. The shortage of Co2 is going to have a big impact on the economy with meat processing and packaging likely to suffer. Furthermore, the shortage is likely to disrupt food supplies, with talk of Christmas likely to experience issues. As trading came to a close, the Pound finished the day at 1.1651 against the Euro and 1.3665 against the US Dollar according to the foreign exchange market.

 

It was a slow start initially for the Euro although it did gain some ground during the afternoon following a strong pullback from the US Dollar. Also bolstering the single currency is the fact that the US travel ban is being lifted from November, helping to boost travel stocks across the Eurozone. 

It was a strong start to the day for the US Dollar as investors took a risk-off mood which helped to provide support for the safe-haven currency. Despite this initial rise, a drop in US bond yields meant that it surrendered most of the gains it had made as the day moved on.

Tuesday 25th September

It was a mixed day for the Pound on Tuesday as data from the Confederation of British Industry was better than expected although this was met by concerns around the ongoing gas crisis.

Even though the government managed to put a deal in place to restart Co2 productions, the pressure was still on the currency as it is still likely that the UK will face a challenging winter. Therefore, the Pound finished the day at 1.1651 against the Euro and 1.3661 against the US Dollar according to the Foreign Exchange Market.

It was a different story for the Euro as it gained ground against many of its peers yesterday after the European stock market mounted a solid recovery. This boost came from travel-related stocks as the US announced that travel restrictions would be eased for those who have received both vaccinations. 

The US Dollar also managed to gain some ground yesterday as investors adopted an off-risk mood which resulted in further support for the safe-haven currency. While a recovery looked likely, any gains were limited. This was down to the US markets remaining hesitant as they awaited the Fed’s policy decision today, with the likely outcome being the tapering of bond purchases.

Wednesday 26th September

On Wednesday, the Pound was still very much at the mercy of the ongoing energy crisis in the UK.

Even though the government managed to secure a deal with CF industries to resume the production of Co2, investors still remained concerned about the issues that could arise heading into winter. This placed pressure on the currency forcing it to dip again. As a result, it rounded off the day at 1.1649 against the Euro and 1.3623 against the US Dollar according to the Foreign Exchange Market.

It was a day of little movement for the Euro as the Federal Reserve decision and the general election in Germany both left investors feeling hesitant. Angela Merkel has brought stability during her stint in power for the last 16 years which is why investors are slightly concerned about the outcome of the election, all of which weighed heavily on the single currency.

The US Dollar weakened through trading on Wednesday as US investors waited for the Federal Reserve’s policy decision, dampening demand for the safe-haven currency. The Fed left the policy unchanged and this came with an aggressive stance and with the central bank expecting to taper bond purchases soon, it gave the US Dollar a short-lived boost.

Thursday 27th September

The Pound had a change of fortune on Thursday as it gained support following the Bank of England taking a hawkish tone during its latest monetary policy meeting.

Even though no changes have been made to monetary policy, talk of tapering in the near future gave the currency a boost. So, according to the Foreign Exchange Market, the currency rounded off the day at 1.1688 against the Euro and 1.3724 against the US Dollar.

It was a different day for the Euro as it struggled to gain any traction. This was down to the news that the Eurozone and German PMI’s both failed to meet expectations. In addition to this, the German general election is leaving investors feeling jittery and that is also forcing pressure onto the single currency. However, further data releases this morning which includes the Ifo business climate for Germany could limit any gains.

The US Dollar also lost ground yesterday as investors took a risk-on approach while disappointing data saw the currency lose any gains it had made on Wednesday after the decision of the Federal Reserve. Initial jobless claims rose unexpectedly last week while Markit PMIs both came under expectation, putting a dent in the US Dollar.

Friday 28th September

It was a mixed day for the Pound on Friday as it received a welcome boost from the Bank of England announcement although the concerns surrounding the fuel shortage put a cap on any gains.

The shortage of HGV drivers resulted in some petrol stations having to close and with talk of disruption leading up to Christmas, a lot of concern was placed on how the economy will be impacted. As a result, the currency finished at 1.1669 against the Euro and 1.3676 against the US Dollar according to the Foreign Exchange Market.

The Euro remained subdued on Friday as investors still remained cautious in the lead up to the German general election on Sunday. The Ifo business climate reading in Germany also placed pressure on the single currency as it dropped to a five-month low following disruption to the supply chain.

It was a different day for the US Dollar as it rallied on Friday after an off-risk market mood increased demand for the currency. This came after Evergrande, a Chinese property giant failed to make an interest payment and that helped to give the Greenback a boost.

 

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