Daily Market Bulletin – 17 December 2021

Market Developments

Sentiment appears cautious as markets contemplate two days of intense central bank activity and digest Omicron news and Sino-US tensions, with the US Commerce Department blacklisting more Chinese firms.

Earlier, the Bank of Japan maintained interest rates at -0.1%, extended its pandemic loan scheme by six months (until September) and announced that it will reduce the amount of corporate bonds and commercial paper it buys, to pre-pandemic levels from April.

Just released, UK Retail Sales for November came in at 1.4% m/m vs 1.1% prior (revised from 0.8%).

On Thursday, the Bank of England surprised markets again, this time by raising rates for the first time since the pandemic, to 0.25%.

The European Central Bank announced a cautious taper, performing a delicate balancing act. It will discontinue net asset purchases under the Pandemic emergency purchase programme (PEPP), at the end of March 2022, but stands ready to resume it if necessary.

The Asset purchase programme (APP) however, will increase to €40 billion/month in the second quarter and €30 billion in the third quarter. From October onwards, purchases will be maintained at 20 billion euros, for as long as necessary to reinforce the accommodative impact of its policy rates.

The ECB upgraded its Inflation for 2021 and 2022, while downgrading those for GDP.

Main Asia-Pacific stock markets were somewhat mixed, European futures appear to be in similar mood and US 10YR Yields steady.

The US Dollar consolidates, the JPY Basket attracts flows and Antipodeans (AUD, NZD) are pressured against both.

Instruments Snapshot

EUR/USD is capped by 1.1350 and lacks firm direction after its two-day rebound.

GBP/USD steadies above 1.3300, following Thursday's BoE-fueled rally up to 1.3375.

USD/JPY stays on the back foot, testing 113.50.

USD/CAD attracts buying interest and probes 1.2800.

AUD/USD slides after yesterday's month high (0.7224), but holds above 0.7150.

NZD/USD ends its two-day advance, dropping towards 0.6750

GER30 is soft above 15,500.

US30 shows indecision above 35,900.

USOIL is tepid below 72.00.

XAU/USD extends its gains past 1,805.

Economic Calendar Picks (GMT)

After a couple of extremely busy days in terms news events, today's economic calendar is lighter.

We expect IFO Business Climate from Germany (09:00), Consumer Price index form Eurozone (10:00), as well as a couple of Fed speakers.

Oil traders await US Baker Hughes Oil Rig Count (18:00).

See the economic calendar here.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

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