There was little impact from the UK data releases with markets focussed on risk conditions despite underlying reservations over demand conditions. Overall market sentiment held firm during the European session and there was also evidence of a covering of short Sterling positions ahead of the holiday season. Markets remained wary over Omicron developments, especially with the UK recording new daily infections of over 100,000 on Wednesday, but there was further optimism that the severity of cases will be lower.
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ECB council member Holzmann stated that in an extreme scenario interest rates could be increased next year. Holzmann has been a hawkish member on the committee and market expectations were still that the central bank would maintain a dovish stance next year even with a surge in energy prices. There were further reservations surrounding the near-term Euro-zone outlook as countries continued to tighten restrictions in order to slow the spread of Omicron and curb the increase in hospitalisation rates.
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US consumer confidence strengthened to 115.8 for December from a revised 111.9 the previous month and above consensus forecasts of 110.8. Although there was a slight retreat in the current conditions component, this was more than offset by a stronger reading for expectations with consumers more confident over making major purchases. There was, however, slightly reduced confidence in the labour market. Inflation expectations also retreated slightly from the 13-year high recorded in November, but the Federal Reserve will remain uneasy over the risk that expectations will become un-anchored. Existing home sales increased to an annual rate of 6.46mn for November from 6.34mn in October, but slightly below market expectations. The dollar was unable to make any headway and was undermined by seasonal selling, together with position adjustment and positive risk conditions.
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13:30 US Durable goods orders Forecast 1.6. Previous -0.4%