Market Reviews 17 Dec 2021

Dec 17, 2021


The European currency is showcasing the combined market movements of trading against the US dollar within the Asian trading session, combining close to the local highs in the market from November 30, updated on the previous day. The European Central Bank’s call and thought upon sudden tightening of the monetary policy will be able to render the required support to the single currency on the previous day. The interest rate remained stagnant at zero, but the impact will be reducing the volume of purchases of bonds under the PEPP program at a steady business movement in the upcoming year, which will give freedom to totally curtail the program by early April 2022. As stated earlier, the ECB will be targeted at inflation rate for the rate increased at 2%, noting the currently associated risks and the unpredictable situation around the detection of the upcoming Omicron coronavirus strain. Investors at present are paying attention to November statistics on consumer inflation in the euro area. The Consumer Price Index is expected to reduce from the level of 0.8% to 0.5% within a month, but maintain a similar growth rate at 4.9% every year. The basic CPI in November may reduce from 0.3% to 0.1%. Also during the same day statistics from IFO upon the level of business optimum performance for December month is expected to be announced for publication in Germany.


The British pound is getting traded combined against the US currency within the morning trading session, combining around 1.332 in between almost all of the long profit-taking alternatives. On the previous day, the instrument showcased stable growth and updated from local highs from November 24, which was the market’s result of a sudden unexpected rise in rates by the Bank of England. Considering huge inflation, which reached 5.1% in November every year (after rising 4.2% in October), the regulator announced a rise in the key interest rate to 0.25%, and the decision was made almost unattentively (8 votes against 1). Thus, the Bank of England got the position of one of the first major central banks in the world for taking this step. Also, the British regulator decided to take care of the volume of UK government bond purchases at 875B pounds. In return, the US Federal Reserve, which gathered for a meeting on the previous day, only announced a sudden increase in the speed of cutting down the quantitative easing (QE) program. The Prime agenda of investors at present is visible on the November statistics on the volatile market movements of retail sales, and also on the Bank of England’s Quarterly Bulletin presented for Q4 2021.


The New Zealand dollar is showcasing a small amount of reduction in pairing with the US currency within the Asian trading sessions, testing at the level of 0.6775 for a breakdown. NZD/USD is constantly rectifying post attempts of rapid growth on the previous day when the New Zealand dollar revived with highs on the local market from the beginning of the month. Not the most assured and promising macroeconomic statistics from the US put pressurised on USD on Thursday. The number of earlier claims on unemployment for the week ending December 10 shoot up from 188K to 206K, which was worse than the market forecasts of growth to 195K. Also during the same time, the Philadelphia Fed production Survey in December went down from 39 to 15.4 points (with the outlook of a fall to 30 points), and the combined volume of Industrial Production spiked down sharply from 1.7% to 0.5%. Today, macroeconomic statistics from New Zealand exert a pressurised situation on the instrument. ANZ Business Confidence index went down from -16.4 to -23.2 points in December. ANZ Activity Outlook for the same period went down from 15% to 11.8%.


The US dollar showcased widespread trading dynamics against the Japanese yen within the Asian trading session, combining near 113.60. on the previous day, the instrument showed a sudden active decline and retreated from the highs of the local market from November 26, responding to the reports that were published unexpectedly weak macroeconomic statistics from the United States. In particular, investors reacted negatively to the sharp decline in industrial production in December from 1.7% to 0.5%, and also to the sudden drop in business activity indicated in December. Market Manufacturing PMI went down from 58.3 to 57.8 points, and the Services PMI decreased from 58 to 57.5 points. At present, the Bank of Japan published its final call on rates, which, however, had practically no impact on the volatile movements of the market. As expected, regulators kept the interest rate at -0.1% and also announced the extension of the present programs to showcase support within the economy at least till September 2022. In the same time frame, the Bank of Japan has shown a significant improvement in the prospective areas for the national economy, despite the already existing risks associated with the pandemic.


Gold prices are constantly recovering noticeably at the end of the trading week and are constantly active testing at 1800.00 for a breakout. The US Federal Reserve’s decision to end the quantitative easing (QE) program till March 2022 only showcased the bullish movements upon the instrument, while the US dollar also lost the market movements for growth, At present investors do not expect any significant drivers. In addition, on the previous day, the US released not the most confident macroeconomic statistics, which enforced the markets to pay close attention to the real state of the economy in the country. In particular, the number of Initial unemployment Claims again extended 200K, and the volume of industrial production in December fell suddenly from 1.7% to 0.5%.