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  • richard evans

Isolate today or risk missing Christmas

Good morning

A fairly quiet day in the currency markets yesterday and looking at the calendar we could be in for more of the same today as we await the central bank rate announcements later in the week.

GBPUSD traded up to 1.3270 yesterday afternoon but failed to extend beyond there and slipped back late in the day to the 1.3200 area, which is where we trade right now Unemployment numbers this morning seemed to put a cap on at attempted recovery as the pair tested and failed at 1.3215. GBP is also weaker against EUR, EURGBP had tested down to 0.8500 (GBPEUR 1.1765) yesterday but has traded up to 0.8540 (1.1710).

There is some thinking that ECB could be on the more hawkish side later in the week, perhaps announcing an end to its PEPP purchases, while BoE is likely to keep rates unchanged once again. We are still a very long way from being able to call the ECB hawkish, but at some point they will need to unwind some of the monetary stimulus they provide.

Covid is still making most headlines, it looks like more Premier League teams are facing outbreaks which is likely to see more matches called off. This evenings match of Brentford v Man Utd is the latest match to be postponed. Not sure if these outbreaks are linked Omicron or just ‘regular’ Covid although it is clear that Omicron cases are far higher than official numbers suggest. NHS leaders say it is unlikely to meet Government plans that everyone over the age of eighteen will have a booster this year, although I actually read the government plan as having ‘offered a booster’ rather than actually be given one. A small but significant difference.

MPs vote later on new Covid measures and it is thought some 70+ Tory MPs will vote against the measures in a protest against Boris Johnson. The measures are still expected to pass as they are likely to have Labour support. I do understand voting against the government can be a protest, but I absolutely do not agree that the health and safety of the country should be potentially put at risk just so some MPs can voice their displeasure.

USDCAD traded up to 1.2825 as BoC unveiled their inflation and policy framework, keeping a 2% target for the next five years with some tweak of wording to employment targets.

USDTRY traded up to 14.60 yesterday before CBRT stepped in and took the pair back to 13.65 or so. It held around there for a while but this morning has pushed back above 14.00, reaching 14.15 so far. There are reports that Erdogan is meeting with some Bank CEOs today. I recall that Turkey was looking for EU membership not so long ago. I wonder what would have happened had they actually joined.

So we’ll sit for another day perhaps, watching Covid headlines and wondering when we’ll hear how bad, or otherwise, Omicron is. I continue to think that even if it turns out to be mild, the sheer number of cases are likely to see more people ‘pinged’, off work or isolating. With Christmas just eleven days away and isolation times running at ten days, anyone having to isolate after tomorrow is likely to miss Christmas.

- 10.00 EU industrial production

- 13.30 US PPI

- 21.45 NZ current account

- 23.30 AUS Westpac consumer confidence

- 02.00 China retail sales, industrial production

- 07.00 UK CPI, RPI, PPI

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