Markets Report - 06 December 2022

A daily breakdown of the markets for the 6th December 2022, provided to you by Sterlex.

🇪🇺💶Constantinos Herodotou, Governor of the Central Bank of Cyprus and member of the European Central Bank (ECB) Governing Council, touched upon the topics of inflation and interest rates in his speech on Tuesday. Spot prices remain on the defensive below the 1.0500 psychological mark and move little following the release of better-than-expected German data. The EUR/GBP pair is struggling to cross the immediate hurdle of 0.8610 in the Asian session - earlier, the cross resurfaced after dropping marginally below the cushion of 0.8600. The EUR/USD pair surrenders its modest intraday gains to the 1.0520 area and refreshes the daily low during the early European session. The asset is expected to display volatile performance ahead as investors are awaiting the speech from European Central Bank (ECB) President Christine Lagarde scheduled for Thursday.

🇬🇧💷GBP/USD lost more than 50 pips on Monday and seems to have gone into a consolidation phase at around 1.2200 in the European morning on Tuesday. It’s worth noting that the British Retail Consortium’s (BRC) Like-For-Like Retail Sales jumped 4.1% YoY in November versus 1.2% prior. GBP/JPY prints 0.30% intraday gains as it pokes a multi-day-old resistance line surrounding $167.60 heading into Tuesday’s European session. Even so, Reuters said, “British consumer spending ticked up last month at a rate that greatly lagged behind inflation, according to surveys on Tuesday that underscored the pressure on household budgets ahead of the Christmas holidays.” On the contrary, the final readings of the UK’s November month S&P Global/CIPS Composite PMI eased to 48.2 versus 48.3 initial forecasts whereas the S&P Global/CIPS Services PMI confirmed the 48.8 flash estimates.

🇺🇸 🏦October Goods Trade Balance will be the only data featured in the US economic docket later in the day. The 10-year US Treasury bond yield stays in positive territory at around 3.6% in the European morning and US stock index futures trade flat on the day. This reading came in better than the market expectation of 53.1 and helped the US Dollar outperform its rivals in the second half of the day. Ivey November PMI from Canada and the GDT Auction from New Zealand will also be looked upon for fresh impetus. The data published by the ISM revealed on Monday that the business activity in the US service sector expanded at a strengthening pace in November with the Services PMI rising to 56.5 from 54.4 in October. The 10-year US Treasury bond yield stays in positive territory at around 3.6% in the European morning and US stock index futures trade flat on the day. Following Monday's decisive rebound, the US Dollar Index clings to modest daily gains early Tuesday as investors adopt a cautious stance. Nevertheless, the CEM Group's FedWatch Tool shows that markets are still pricing in a nearly 80% probability of a 50 basis points (bps) Fed rate hike in December.