Should we keep an eye on the pound's direction?
21.12.2021
- Switzerland: Trade Balance
- UK CBI Retail Survey
Yesterday, the three major U.S. stock indices all fell by more than 1% for the second consecutive day, creating a risk-off market characterized by falling stock prices, rising interest rates, and lower oil prices. The VIX (fear index) rose above its benchmark level of 20 to 22.8. Similar price movements were seen in Europe, where the spread of the Omicron variant is causing widespread concern. The announcement of a lockdown in the Netherlands also appears to have impacted stock prices.
In the foreign exchange market, the pound’s decline has been particularly noticeable. Combined with rising U.S. 10-year Treasury yields, the GBP/USD pair fell from 1.324 to 1.317. However, on the 4-hour chart, the pair has bounced off the 1.317 level multiple times, forming a lower wick. Therefore, we need to carefully assess whether a rebound is likely.
Today’s schedule includes the German GfK Consumer Confidence Survey, Swiss trade balance, Turkish Consumer Confidence Index, and UK CBI Retail Trade Survey at 4:00 PM; Canadian retail sales and U.S. third-quarter current account balance at 10:30 PM; a U.S. 20-year Treasury auction at 3:00 AM; and the New Zealand ANZ Consumer Confidence Index at 6:00 AM the following day.We will closely monitor price movements while remaining vigilant for sudden price fluctuations caused by position adjustments ahead of Christmas.
Author: Keisuke Sakurai
