Good morning,

Tapering of the US pandemic stimulus package once again dominated headlines, with the Atlanta Federal Reserve president saying the slowdown in the US labour market should not derail the Fed’s taper timeline. This statement comes in the wake of Friday’s underwhelming non-farm payroll figure along with todays JOLTS Job Opening figure also disappointing expectations being printed at 10.44m against forecast of 10.95m. Atlanta Fed President Bostic also went on to cite US inflation as being elevated but said the Federal Reserve’s stance on interest rates has not been affected. GBPUSD spent most of the day trading in the low 1.36 level and briefly breaking in to the 1.35 range, printing a low of 1.3570 with a high of 1.3636.

A similar sentiment was the driving force behind EURUSD and given the pairs dominance in the FX market you would expect to see such movement. The single currency was not given and support on the data front with German ZEW economic sentiment missing forecast being printed at 21.0 against forecast of 27.9. The data set is a leading indicator of economic health and is a key signal of the future of economic sentiment. The Continent is also still pensive of an impending energy crisis with Russia looking to be a crucial player in elevating it. However, Moscow’s EU envoy has urged the EU to fix with Russia to avoid such a crisis.

Given the hot topic of global interest rates, markets will be firmly focused on today’s US MoM CPI reading with both the CPI and core CPI forecast at 0.3% and 0.2% respectively, with the FOMC meeting minutes also in focus.

Have a good day.

Author: Joshua Nagenthiran, Senior Relationship Manager

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