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Overview
Markets have seen some choppy price action this week in the run up to Christmas. Firstly, commodity currencies have strengthened marginally across the board, amid a turnaround in sentiment in the commodities complex. WTI is set to finish over 4% higher than where it started, benefitting from yesterdays unexpected drawdown in U.S. Crude Oil Inventories (-5877K vs. Exp. 1200K Prev. 4801K). As such the likes of CAD, RUB and NOK have benefited with CAD coming off multi year lows.
GBP has seen some softness during parts off the week wherein EURGBP reach its highest level since 15th October highs and GBP/USD fell below 1.4850 for the first time since April. Many commentators are suggesting that come the New Year, more significant focus will be put on the focus of a Brexit, while the more dovish than anticipated comments from BoE’s Weale suggest the BoE are not clos e to hiking rates any time soon.
Looking ahead, next week is set to be particularly quiet as traders take the opportunity of some R&R between Christmas and the New Year, however come the New Year markets should pick up again and participants can look forward to the first post-FOMC nonfarm payroll report, in which the Fed will be hoping will justify their actions.
WEEKLY FX OUTLOOK: Market participants eagerly await Father Christmas, who has given commodity linked urrencies an early gift of reprieve.
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