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The German IFO business confidence index declined to 96.5 for November from 97.7 the previous month and marginally below consensus forecasts. There was a limited decline in the current conditions index with a similar drop in the expectations index. The IFO commented that the recent drop in confidence is a cause for concern. It added that supply chain bottlenecks are placing companies under a lot of stress with no prospect of a short-term change and that the vast majority of companies want to raise prices. The Euro remained under pressure ahead of the New York open with further concerns over coronavirus developments

US initial jobless claims declined sharply to a 19-month low of 199,000 in the latest week from a revised 270,000 and well below consensus forecasts of 260,000.

Durable goods orders declined 0.5% for October after a 0.4% retreat the previous month with a 0.5% increase in underlying orders.

The Euro dipped further following the jobless claims data with fresh 16-month lows below the 1.1200 level as the dollar posted further net gains across the board.

The core PCE prices index increased 0.4% for November after a 0.2% increase the previous month. The annual rate increased to 4.1% from 3.7% and the highest reading since February 1991, although this was in line with market expectations which dampened the impact.

San Francisco Fed President Daly stated that there was a case for accelerating the tapering of bond purchases, maintaining speculation that there would be a shift in the bank stance. The Euro attempted to recover, but remained firmly on the defensive amid dollar strength.

Market conditions are liable to be subdued on Thursday with the US Thanksgiving Holiday and the Euro secured a slight recovery to near 1.1215 on Thursday.




The US goods trade deficit narrowed to $82.9bn for October from $97.0bn the previous month and well below expectations of $95.0bn with a sharp recovery in exports for the month. The trade data curbed concerns that the dollar would be undermined by concerns over wide trade and budget deficits.

There were renewed losses for Treasuries during the day with the 10-year yield increasing to around 1.68%. The yen was able to secure only limited support on the crosses and the dollar posted fresh 6-year highs around 115.40 after the US data releases with resistance on approach to 115.50.

According to minutes from the November meeting, Federal Reserve members considered that inflationary pressures could take longer to subside than expected previously and that some participants were already pushing for a faster pace of tapering. Several members emphasises that interest rates should be increased sooner than expected if inflation continues to run high, but staff continued to see growth risks to the downside. The overall rhetoric was relatively hawkish.

There was no further increase in US yields with subdued conditions in Asia as the dollar consolidated around 115.40 with the Euro around 129.40.




The UK CBI industrial trends index strengthened to 26 for November from 9 the previous month, comfortably above consensus forecasts of 18 and the strongest reading since 1977. Exports posted their strongest reading since March 2019 and stock levels were very low while prices increased at the fastest rate since 1977 which will maintain underlying concerns over inflation pressures. Sterling was unable to secure a boost from the data and was also hurt by the strong dollar.

Bank of England MPC member Tenreyro stated that interest rates were likely to increase in the medium term, but she declined to put a more precise timeframe on the potential timing of an increase. She added that she would not comment on the specific potential for a hike in December or February, but was generally cautious.

The UK currency dipped to fresh 2021 lows around 1.3320 against the dollar while the Euro held close to 0.8400.

There were reservations surrounding Brexit developments with the two sides still seeing substantial differences over the Northern Ireland protocol, although there was also some positive rhetoric. Sterling was held just below 1.3350 against the dollar on Thursday with the Euro close to 0.8400.




The Swiss ZEW economic expectations index dipped to -10.8 for November from 15.6 the previous month, maintaining reservations over the domestic outlook.

The Swiss franc tended to lose ground ahead of Wednesday’s New York open, but the Euro again failed to break back above the 1.0500 area and drifted lower again later in the day as the franc secured underlying backing. The dollar strengthened to highs near 0.9375 before fading into the European close.

The franc held firm on Thursday as long-term inflation expectations underpinned demand and the dollar was held around 0.9340.


Technical Levels



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