Good morning,

Yesterday, US initial claims for unemployment benefits printed at 340,000 against the previous 354k. Nevertheless, the market did not react to the data with all eyes firmly focused on tomorrow’s Non-Farm Payroll figure. The NFP figure is forecast to be printed at 720k against a previous figure of 943k. Over the last few months NFP figure have been closely watched as market participants have been looking for any forward guidance or indication around the tightening or tapering of the monetary policy.

The recent announcement by Fed Chair Jerome Powell regarding the plans for tapering the monetary policy has caused USD to consolidate and give up some of the ground it made. Nevertheless, GBP remains subdued with market participants eagerly waiting for any guidance around the (Monetary Policy Committee) MPC’s response to a post Covid economic bounce back. Today, the movement pushing GBPUSD above 1.38 is a great indicator but resistance remains strong against GBP.

Elsewhere, there is now sentiment amongst market participants that the (European Central Bank) ECB may look to reduce the PEPP (Pandemic Emergency Purchasing Program) citing rising inflation. Nevertheless, with many central banks taking the stance of current inflationary pressures being transitionary, it will be interesting to see if the ECB strike a similar tone to that of their US counterparts. Eyes now will be firmly focused on the ECB monetary policy meeting this time next week to see if there is any guidance around policy contraction.

Outside of the previously mentioned NFP figure due later today, the ISM Services PMI figure is the only other data set of note.

Have a great weekend.

Author: Joshua Nagenthiran, Senior Relationship Manager

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