Market Report : 04.01.2024

Published: 04/01/2024 By ECAP

The British Pound seems undermined by the fact that business leaders in the UK are more pessimistic about the outlook for the economy and are pushing the Bank of England to start cutting rates early this year. In fact, the money market pricing suggests that market participants expect around 140-basis points of rate cuts in 2024.

The Euro extended its losses yesterday following a positive job report in Germany which did nothing to help the single currency, leaving the Euro at the mercy of dollar dynamics. Looking forward, investors will focus on December’s Composite PMI and Services PMI from France, Germany, and the Eurozone for further cues on the bloc’s economic health.

The greenback marked a sharp recovery from five-month lows hit at the end of 2023, as markets second-guessed the timing of the Fed’s planned interest rate cuts. In fact, the minutes of the Fed’s December meeting provided little clarity on the bank’s plans for rate cuts this year, which further unsettled risk appetite after a weak start to 2024 for financial markets.

Data supplied by GC Partners