Renewed concerns surrounding the possibility of an escalation in the Ukraine conflict led to a brief bout of Dollar strength yesterday, although this rally was quickly reversed.
We’re in somewhat of a calm after the storm, as markets take stock after the US election and catch their breath during what looks set to be a relatively quieter period.
Macroeconomic news is at a premium in the US throughout most of the week, and headlines centering on the appointments within Trump’s cabinet have died down somewhat. Trading in the US today should be light, although market participants will likely be keeping one eye on remarks from FOMC officials Cook, and Bowman this afternoon. Weekly jobless claims data (Thursday) will give us the latest read on the state of the US labour market. This will be followed by the all-important PMI data from S&P Global on Friday afternoon.
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EUR/USD holds lower ground near 1.0550 on Wednesday. The US Dollar benefits from rising US Treasury bond yields and the cautious market mood, forcing the pair to stay on the back foot. Several Federal Reserve policymakers will be delivering speeches later in the day.
GBP/USD declines toward 1.2650, erases UK CPI-led gains
GBP/USD loses its traction and retreats toward 1.2650 on Wednesday. Although the stronger-than-expected inflation data from the UK helped Pound Sterling gather strength, the risk-averse market atmosphere caused the pair to reverse its direction.
Gold stays below $2,640 as US yields rebound
Gold struggles to hod its ground and trades below $2,640 on Wednesday. Following Tuesday's slide, the benchmark 10-year US Treasury bond yield stays in positive territory, making it difficult for XAU/USD to building on its weekly gains.
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Sticky UK services inflation to keep BoE cutting gradually
Services inflation is set to bounce around 5% into the winter, while headline CPI could get close to 3% in January. That reduces the chance of a rate cut in December, but in the spring, we think there is still a good chance the Bank of England will accelerate its easing cycle.
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