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The US NFIB small-business confidence index edged higher to 98.4 for November from 98.2 previously. Companies, however, did express increased uncertainty and there was also strong upward pressure on prices with price increases seen at the fastest rate since 1979.

The Euro was able to make headway ahead of Tuesday’s New York open with a move to above 1.1300 against the dollar despite a lack of yield support. There was further evidence of Euro short covering ahead of key central bank policy meetings this week.

US producer prices increased 0.8% for November, above consensus forecasts of 0.5% with the year-on-year rate increasing to 9.6% from 8.8% and above market expectations of 8.8%. Core prices increased 0.7% on the month with the annual rate increasing to 7.7% from 7.0% and above forecasts of 7.2%. This was the highest core rate since the data series started in 2014, maintaining underlying concerns surrounding inflation trends.

The data had some impact in increasing inflation concerns ahead of Wednesday’s Federal Reserve policy decision. There are widespread expectations that the Fed will announce a faster pace of asset-purchase tapering and that the interest rate forecasts by individual Fed members will also be increased.

The Euro was unable to hold above the 1.1300 level and there was a significant retreat later in the day as underlying yield spreads remained negative for the single currency. The dollar also gained an element of support on defensive grounds as equities moved lower with a Euro retreat to lows just above 1.1250.

Narrow ranges prevailed on Wednesday ahead of the Federal Reserve policy decision with the Euro around 1.1275 with global risk conditions also watched closely.


US Treasuries were subjected to choppy trading on Tuesday with net losses into the European close, although there was a significant recovery from lows as equities moved lower. The yen was unable to gain significant support despite the notable decline in equities and the dollar was able to secure a slight net advance into the European close as it traded around 113.60. The Bank of Japan continued to resist any increase in money market rates which sapped yen support.

US Congress voted in favour of increasing the Federal debt ceiling, removing the immediate threat of a default, although there was still no longer-term resolution.

Chinese industrial production growth was in line with consensus forecasts at 3.8% in the year to November from 3.5% previously, but retail sales growth was below expectations at 3.9% from 4.9% previously while there was also an increase in the unemployment rate.

Asian equity markets were mixed with a slight recovery in US futures and the dollar consolidated around 113.75 against the yen in early Europe on Wednesday.


There was a muted impact from the latest labour-market data with the immediate Bank of England focus likely to be on the Omicron uncertainties rather than the underlying case for a tighter monetary policy. Markets also continued to monitor risk conditions closely.

Sterling was unable to make headway into the New York open, but was broadly resilient later in the day despite a sharp retreat in US equity markets.

The market consensus has switched towards expecting no change in interest rates from the Bank of England at Thursday’s policy meeting. Given the shift in expectations and market pricing this lessened the potential for further Sterling selling by hedge funds.

Sterling found further support below the 1.3200 level against the dollar and traded around 1.3220 while the Euro retreated to around 0.8520 from highs above 0.8550.

The UK CPI inflation rate increased sharply to 5.1% for November from 4.2% previously, above consensus forecasts of 4.7% and the highest rate for just over 10 years. The core rate also increased to 4.0% from 3.4%. The sharp increase will maintain pressure for a bank of England response and Sterling edged higher after the data, but was held just below 1.3250 against the dollar with the Euro around 0.8510 amid expectations that the central bank would keep rates on hold this week.


The Swiss franc maintained a strong tone on Tuesday with net support from a defensive tone surrounding risk appetite. The Euro dipped below the 1.0400 level before a slight recovery to trade around this level while the dollar found support below the 0.9200 level and secured a limited net recovery to near 0.9230 amid the wider US advance. Markets remained wary over intervention from the National Bank and there was also some caution ahead of Thursday’s policy meeting.

There was little change on Wednesday with the dollar close to 0.9240 as risk conditions held little changed.

Technical Levels

Today's Calendar



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