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German trade data was slightly weaker than expected with exports declining 0.7% for September, although there was little overall market impact. The German ZEW investor confidence index strengthened to 31.7 for November from 22.3 the previous month and above consensus forecasts of 20.0. The current conditions index, however, dipped to 12.5 from 21.6 and significantly below market expectations. The Euro-zone confidence index strengthened to 25.9 from 21.0 previously.

ECB council member Knot stated that conditions for a rate hike are very unlikely to be met in 2022, although inflationary pressures from higher energy prices and supply bottlenecks are lasting longer than thought initially. He added that policy optionality needed to be a key element once the emergency bond-buying programme is completed. The comments maintained the underlying dovish rhetoric from key ECB figures.

The US NFIB small business confidence index declined to 98.2 for October from 99.1 the previous month. US producer prices increased 0.6% for October with the year-on-year rate unchanged at 8.6% and in line with consensus forecasts. Core prices increased 6.8% over the year and are also in line with market expectations.

San Francisco President Daly stated that inflation is all about whether it persists beyond the covid disruptions. She added that it’s too risky to raise rates now given uncertainty of how long inflation pressures will last and the best policy is to stay steady and be vigilant.

The dollar recovered some ground against commodity currencies and the Euro was unable to hold above the 1.1600 level. The dollar secured a limited net advance ahead of Wednesday’s important CPI data with commodity currencies losing ground and the Euro drifting lower to 1.1575.




US Treasuries rallied again in early New York with no significant negative surprises from the producer prices data.  Equity markets also moved lower which provided further net support to the Japanese currency and the US dollar moved lower. US bond yields continued to move lower after the European close with the 10-year yield retreating to 6-week lows near 1.43%. The dollar did demonstrate some resilience and settled around 112.80 against the Japanese currency.

The latest US CPI inflation data will be released on Wednesday which will have a significant impact on inflation expectations and bond markets.

Japan’s Tankan manufacturing index slipped to a 7-month low of 13 from 16 previously with supply issues having a negative impact while the non-manufacturing index edged to a 3-month high. Markets continued to monitor the wider global economic trends.

Chinese consumer prices increased 1.5% in the year to October while producer prices increased 13.5% over the year, the strongest annual rate on record. There were also further concerns over the Chinese property sector with reports that banks were demanding early repayments of loans.

The yen maintained a firm tone, especially with less confident risk conditions with the dollar held below the 113.00 level on Wednesday.




Sterling maintained a strong tone in early Europe on Tuesday but failed to hold above 1.3600 against the dollar while the Euro found support close to 0.8520.

Bank of England deputy Governor Broadbent stated that he expects labour-market constraints will ease over time and there was certainly no clear signal that he would back a near-term increase in interest rates which limited potential Sterling support as choppy trading conditions persisted.

The NIESR stated that it expects the Bank of England will increase interest rates to 0.5% by the second quarter of 2022 and then pause until inflation reaches a peak.

Sterling overall lost ground later in the day with a more defensive tone surrounding risk appetite undermining support. Underlying Brexit tensions were also a significant factor eroding potential support. There was a retreat to around 1.3550 against the dollar while the Euro recovered to 0.8550.

Risk appetite remained more fragile on Wednesday with Sterling around 1.3550 against the dollar and the Euro just below 0.8550.




Swiss National Bank member Maechler stated that increased inflation outside Switzerland can contribute to a higher value for the franc while concerns such as Evergrande can propel money into the Swiss currency.  There was some speculation that the National Bank would curb efforts to weaken the Swiss currency which would have an important market impact. The Euro retreated to near 1.0550 against the franc while the dollar dipped to test the 0.9100 area.

The franc edged slightly lower on Wednesday with the dollar securing a limited net advance to near 0.9130 while franc sentiment held firm.

Technical Levels 

Calendar Levels 




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