Market Report : 05.01.2024

Published: 05/01/2024 By ECAP

The British Pound struggled to find a firm footing this week as markets’ risk appetite waned. In fact, investors see tough decisions ahead for BoE policymakers who are stuck between deepening recession risks in the UK economy and high underlying inflation. Ultimately, the likelihood of a technical recession in the UK economy is high as it contracted in the third quarter and a stagnant performance is anticipated for the final quarter.

The Euro found some support yesterday following an unexpected upward revision of Eurozone PMIs, which forced investors to pare their bets for more aggressive rate cuts by the ECB. Looking forward, flash inflation figures for the Eurozone are due this morning. The crucial data will play a key role in influencing market expectations about the next policy moves by the ECB.

The U.S. Dollar moved little this morning but remained close to its highest levels since mid-December. Focus is now squarely on key nonfarm payrolls data, due later in the day. While the reading is expected to show more cooling in the labour market, investors remain on edge over any signs of unexpected strength, given that the U.S. labour market ran hot through most of 2023.

Data supplied by GC Partners