UK GDP recovers.

US producer prices increased 0.3% for November with the year-on-year rate declining to 7.4% from 8.1%, but slightly above consensus forecasts of 7.2%.

Underlying prices increased 0.4% compared with expectations of 0.2% with the annual rate at 6.2% from 6.8%.

The University of Michigan consumer confidence index recovered to 59.1 for November from 56.8 the previous month and above consensus forecasts of 56.9. There were net increases for the current conditions and expectations components for the month.

The 1-year inflation expectations index declined to 4.6% from 4.9% while the 5-year index was unchanged at 3.00%.

US yields edged higher on Friday with the stronger US data also providing an element of dollar support with position adjustment into the weekend also a significant factor.

The latest UK data recorded a 0.5% GDP increase for October after a 0.6% decline the previous month and slightly above expectations of 0.4% with slightly stronger than expected figure for the construction sector.

There are major events this week with policy decisions from four major central banks as well as the latest data on US consumer prices.

Consensus forecasts are that the Federal Reserve, ECB and Bank of England will all increase interest rates by 50 basis points this week.

CFTC data recorded a small net increase in long, non-commercial Euro positions and the short dollar position increased to the highest level since July 2021.

Euro-Zone equites posted net gains on Friday which helped underpin the Euro. There were no major data releases during the day. The dollar posted gains after the US data, but failed to hold the advance. EUR/USD found support above 1.0500 and recovered to 1.0535.

US yields edged higher during the day. EUR/USD drifted lower to 1.0515 on Monday as the dollar held firm. USD/JPY recovered from lows at 135.60 to post gains to 136.60 at the US close.

China announced a further easing of coronavirus restrictions on Monday. There was a further net USD/JPY advance to 137.00 on Monday before fading.

The Swiss franc posted net gains ahead of key policy decisions. EUR/CHF dipped to below 0.9850 with USD/CHF dipping to 0.9315 before a recovery to 0.9345.

Sterling posted significant net gains into Friday’s London fix, but failed to hold the best levels. GBP/USD posted strong gains to highs at 1.2320 before a retreat to 1.2260. UK GDP data had little net market impact.

The Australian dollar posted gains as the US dollar drifted lower. AUD/USD moved above 0.6800 before correcting slightly and drifted to 0.6770 on Monday. USD/CAD posted a net advance to 1.3650.

Economic Calendar