Marketwatch EU & UK

Daily Insights
December 19, 2024

  • The Federal Reserve delivered its third straight interest rate cut yesterday, dropping the benchmark rate by 25bp to a range of 4.25%-4.5%. The move was expected however inflation remains a serious headache for officials, with Chairman Jerome Powell admitting that the central banks year end inflation projection has “kind of fallen apart.” Officials have dialled back expectations for rate cuts throughout 2025 as they continue to chase the 2% inflation target which remains illusive and will take more time to reach. Speaking at the press conference which followed the meeting, Powell remains focused on inflation saying, “as we think about further cuts, we’re going to be looking for progress on inflation” adding “we have been moving sideways on 12-month inflation.” Money markets are currently pricing in just 50bp of rate cuts from the Fed next year, roughly half of what was expected just a few months ago. Further fears of inflation coming from fresh tax cuts and tariffs when incoming President Donald Trump comes to office may further influence markets in the coming months. Treasury markets and stocks tumbled after the announcement with the dollar rallying to its highest level in two years pushing EURUSD below recent support to trade as low as 1.0344 before recovering slightly.
  • The Bank of England hold their final policy meeting of the year today and seem unlikely to give UK households an early Christmas present in the form of an interest rate cut. ‘Caution’ remains the buzzword for the MPC as stubborn inflation looks set to limit the number of interest rates in 2025. Money markets are currently pricing in just 49bp of cuts next year down from 70bp which were forecast earlier this month.

Economic Calendar

:
AUD - MI Inflation Expectations
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NZD - ANZ Business Confidence
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AUD - Mid-Year Economic and Fiscal Outlook
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JPY - BOJ Policy Rate
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JPY - Monetary Policy Statement
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JPY - BOJ Press Conference
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CHF - Trade Balance
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EUR - German GfK Consumer Climate
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EUR - Current Account
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GBP - Monetary Policy Summary
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GBP - MPC Official Bank Rate Votes
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GBP - Official Bank Rate
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GBP - BOE Quarterly Bulletin
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USD - Final GDP q/q
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USD - Unemployment Claims
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USD - Final GDP Price Index q/q
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USD - Philly Fed Manufacturing Index
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USD - Existing Home Sales
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USD - CB Leading Index m/m
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USD - Natural Gas Storage
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USD - TIC Long-Term Purchases
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NZD - Trade Balance
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JPY - National Core CPI y/y

Market Indicators

Currency Pairs
Pair High Low
eur/gbp 0.825 0.82347
gbp/usd 0.79569 0.79345
gbp/aud 2.02847 2.0197
gbp/nzd 2.24251 2.23355
usd/jpy 156.477 154.461
eur/usd 0.96612 0.96182
gbp/jpy 197.176 194.32
eur/cnh 7.5968 7.5784
usd/cnh 7.32606 7.30635
Equities and Commodities
Nasdaq 100 21206.3
DOW 42373.3
S&P 500 5877.47
BRENT CRUDE 73.08
WTI 69.6
GOLD 2605.87

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.

About Simon Walker

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Simon Walker is head of the GPS Capital Markets trade desk in our London office where he is responsible for covering market risk in European hours. He has over 25 years’ experience in foreign exchange, working in both sales and trading.