01/12/2022 – Exchange Rates

USD continues to fall against it’s major currency pairs after Federal Reserve Chairman Jerome Powell stated a slowdown of rate increases may come as soon as their next meeting on December 14th. Up until now, The U.S central bank has raised interest rates by 75 basis points at each of it’s last 4 meetings, but with better than expected inflation data over the last month, expectations have now shifted towards members of the central bank agreeing to gradually tone down their rate hikes.

As it stands, GBP/USD is currently floating around the 1.21 area and EUR/USD is at 1.0430 with the Euro’s gains limited due to a fall in German Retail Sales by 2.8% in October, potentially putting another healthy rate hike by The European Central Bank in doubt for their next policy meeting.

China’s Covid restriction developments are also worth keeping an eye on as they are seemingly struggling with continuing with this Zero-Covid policy. Any further restrictions or continued lockdowns would be a positive for the USD but with two major cities already relaxing restrictions, it wouldn’t be a surprise for investors and traders to exit their USD positions and therefore causing further weakness for the USD.

Keeping with The USD, we finish the week off with Non-Farm Payrolls which as ever is the most volatile but also important piece of data for The U.S. Expectations suggest The U.S will have only created 200,000 jobs last month which would be the lowest monthly reading since December 2020. Any movement either side of this figure will no doubt have an impact on the USD in what is becoming slightly volatile at present.

GBP/EUR 1.1605 GBP/USD 1.2110 GBP/AED 4.4414
GBP/AUD 1.7808  GBP/CHF 1.1427 GBP/CAD 1.6260
GBP/NZD 1.9139  EUR/USD 1.0430 GBP/ZAR 20.928

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