Daily Report 03/12/2021

Sterling edged higher during Thursday with the currency responding to a more constructive global risk tone as equities posted significant gains. Markets were still wary over the threat of fresh setbacks given high volatility during the past few sessions with UK coronavirus cases also causing some concern. Irish Foreign Minister Coveney stated that there are significant gaps between the UK and EU on the Northern Ireland protocol. There was little market impact, but markets remained wary over underlying tensions, especially with the US pulling back from any trade deal with the UK.

No Key Data 

The Euro (EUR) is struggling to hold its ground against the Pound (GBP) this afternoon, amidst growing concern over Europe’s Covid situation. Cases on the continent had been steadily rising through the second half of November, before the discovery of the new, highly mutated Omicron variant. While health experts are still assessing the new strain, early statistics from South Africa – where Omicron was first detected – see infection rates rising more quickly than they during previous waves. This might bode poorly for Europe, which sees some countries such as Germany already struggling with record high daily cases. Reports suggest Germany is already considering imposing new restrictions including the closure of bars.

Key Data 

10:00   EUR Retail Sales      Forecast 1.2%     Previous 2.5%

Narrow ranges prevailed ahead of Thursday’s New York open with the dollar unable to gain significant traction and the Euro edged higher. Euro-zone producer prices increased 21.9% in the year to October from 16.1% the previous month and above forecasts of 19.0%, reinforcing inflation concerns. US initial jobless claims increased to 222,000 in the latest week from a revised 194,000 previously, but below consensus forecasts of 240,000. Continuing claims declined to 1.96mn from 2.06mn and below market expectations of 2.00mn. The Challenger data also recorded a decline in US layoffs to below 15,000 for November from 22,800 the previous month and the lowest November figure for close to 30 years. The data-maintained confidence in the US labour market. Atlanta Fed President Bostic stated that there had been a pretty robust recovery in employment and GDP. He added that he would be in favour of tapering sooner rather than later, but also noted that he wanted to see continued momentum in the labour market in the monthly jobs report.

Key Data 

13.30 Nonfarm Payrolls                       Forecast 550k   Previous 531k
15:00 ISM Services PMI                      Forecast 65       Previous 66.7