GBP
Sterling rallied to its strongest levels against the dollar since August last week, benefitting from a weaker greenback as markets grow increasingly expectant of a more dovish Fed tone come December.
The move allowed cable to notch a 3rd straight weekly advance, rallying above 1.20; however, the pound is starting to look a little vulnerable, after rallying almost 20% from the record lows seen in September, and with the bulls having thus far failed to take the quid back above the all-important 200-day moving average.
Looking ahead, this week’s economic calendar is rather on the quiet side, with just the latest manufacturing PMI survey of note, leaving the quid to again be driven largely by external factors.
EUR
The common currency chalked up its second weekly advance in three last week, closing above the 200-DMA on both Thursday and Friday, the first time that the EUR has done so since last summer.
The bulls will now be targeting a continuation of this rally, likely towards the 1.05 region, with the market looking increasingly favourably on the EUR amid signs that this winter’s energy situation is unlikely to be as bad as first feared.
This week, Wednesday’s inflation figures are likely to be the main event. Though headline CPI is set to recede from the record high seen in October, core inflation looks set to remain intense at 5% YoY, leaving markets with plenty to mull over ahead of the December ECB decision.
USD
The greenback struggled against most G10 peers last week, after minutes from the November FOMC meeting showed the majority of participants favouring a downshift to a slower pace of hikes from December, with a 50bps increase at that meeting now the base case.
Consequently, equities rallied, long-end Treasury yields came lower, and the dollar lost ground, falling to 1-week lows against a basket of peers, with losses most significant against more risk-sensitive currencies such as the AUD & NZD.
This week, a busy slate of important economic releases awaits, including the latest ISM manufacturing PMI figure being set to show the first sector contraction in over 2 years, as well as Friday’s jobs report set to show the labour market remaining resilient despite the significant recent tightening in monetary policy.
World News
Protests in China have intensified as the public demonstrate against stringent COVID restrictions. Police and demonstrators clashed on Sunday night, marking the third night of chaos which has spread to China’s biggest cities. Th arrest of a BBC journalist has strained relations between China and the UK further, with a spokesman for UK Prime Minister Rishi Sunak saying the arrest is ‘Shocking and unacceptable.
Demand for UK residential property nearly halved year on year following the Government’s chaotic budget in September. According to property website Zoopla demand has fallen, and prices are expected to fall next year, with home stock continuing to increase.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Tuesday 29th November | US | CB Consumer Confidence | 102.5 | 100 |
| Wednesday 30th November | US | ADP Non-Farm Employment Change | 239K | 200K |
| Wednesday 30th November | US | Prelim GDP q/q | 2.60% | 2.80% |
| Wednesday 30th November | US | JOLTS Job Openings | 10.72M | 10.36M |
| Friday 2nd December | US | Non-Farm Employment Change | 261K | 200K |
| Share Index | Prev. Close | Open |
| FTSE100 | 7486.67 | 7486.87 |
| DAX | 14380.74 | 14471.1 |
| CAC40 | 6712.48 | 6678.11 |