ACY Securities

The Euro (EUR/USD) plummeted 100 pips lower to 1.0895 (1.0995) after data showed that business activity in Europe continued to deteriorate. A poll released by S&P Global, a US financial information and analytics company revealed that activity in Germany and France shrank.

The 'Fed put' unexpectedly surfaced during the December FOMC meeting, as Fed Chair Jerome Powell hinted at potential aggressive rate cuts for 2024.

BoJ officials' recent remarks on policy normalization implications have created market ripples. Pre-emptive policy adjustments have been made, with current conditions necessitating a distinct approach for further changes.

The US dollar experienced a sustained weakening overnight following the Federal Reserve's latest policy update, leading to a significant sell-off. The dollar index declined by approximately -1.4% from before yesterday's FOMC meeting to an intra-day low of 102.43.

The catalyst was a fall in US treasury bond yields, following a dovish posture by the Federal Reserve at its December meeting. The Fed kept its Funds rate unchanged at 5.5% but signaled a policy shift.

October witnessed a 0.3% month-on-month decline in UK GDP, marking a challenging commencement for the last quarter of 2023. The economy hasn't experienced three consecutive months of growth since Q1 2022, during its rebound from the Omicron-related restrictions in late 2021.

The Dollar Index (DXY), a popular gauge of the Greenback’s value against a basket of 6 major currencies eased modestly after US Headline Inflation eased to 3.1% in November from 3.2% previously. Economists had forecast annual US CPI at 3.1%.

This week's FOMC meeting, which is likely the last major US economic event of the year, holds my interest. As we approach its conclusion on Wednesday, it seems almost certain that there will be no rate moves.

The pound has exhibited notable strength in recent trading sessions, showcasing resilience against major currencies such as the euro and US dollar. This robust performance has translated into a renewed upward momentum for cable, pushing it back towards the 1.2600-level.

The US dollar has maintained its robust performance, continuing to trade at stronger levels overnight and extending its advance after the release of a more robust than expected US payrolls report last Friday. This positive momentum propelled the USD/JPY pair back above the 146.00-level during the overnight session.

In the Tokyo trading session close to finish las week, the yen once again demonstrated its mettle by surging to a notable 142.50, following a brief but impactful spike to 141.71 the previous day. This surge marks a pivotal moment as the yen attains its strongest position against the US dollar.

The US economy created a total of 199,000 jobs in October from 150,000 previously and beating median forecasts of 180,000. Unemployment fell with the Jobless Rate down to 3.7% from 3.9%. Average Hourly Earnings also beat estimates, up to 0.4% from 0.3%.