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Inflation is still the one issue that irritates fiscal policymakers and the officials of the central banks across the Atlantic.
On Thursday’s session, the U. S. dollar was the unchallenged winner. The USD was able to resume its advance and reached fresh weekly highs against high yielding rivals. On the other hand, safe-haven assets edged higher against the USD, although without breaking any critical level.
Economic Data
The number of Americans filing new claims for unemployment benefits fell to the lowest level in nearly 20 months last week, suggesting the economy was regaining momentum amid a significant improvement in public health, though supply constraints remain.
The tightening labour market is driving up wages as companies scramble for workers, contributing to keeping inflation high. Labor costs surged in the third quarter, other data showed on Thursday, with productivity sinking at its steepest pace in 40 years. The Federal Reserve announced on Wednesday that it would this month start scaling back the amount of money it is pumping into the economy through monthly bond purchases.
The Bank of England had a monetary policy meeting and decided to leave the interest rate unchanged at 0.1%, disappointing markets that were anticipating a rate hike and further boosting the dollar’s demand.
Other Developments
The GBP/USD pair plummeted to 1.3470, to end the session around the 1.3500 figure. The EUR/USD pair met sellers around 1.1615 for a third successive day, with bulls giving up, resulting in a test of 1.1527. AUD/USD briefly pierced the 0.7400 figure, settling around the level, while USD/CAD jumped to 1.2460, despite plummeting crude oil prices.
WTI currently trades around $79.10 a barrel after the OPEC+ decided to maintain its current output steady at 400K barrels per day.
Gold returned to its comfort zone just below the 1,8000 mark, currently trading at around $1,793.00 a troy ounce, Central bankers are putting a lot of effort into down-talking inflation concerns.
Oil futures ended a volatile Thursday trading session at the lowest prices since early October after OPEC+ resisted pressure from the Biden administration and decided to keep their crude production increases in place.
OPEC+ reaffirmed its previous decision on production levels at a meeting Thursday held by videoconference, and said it will raise the monthly overall production by 400,000 barrels per day in December.
Financial shares were suffering a broad beating Thursday, as Treasury yields sank in the wake of the Federal Reserve’s detailing of its tapering plans.
As the Bank of England held off on an expected rate hike, the SPDR Financial Select Sector ETF dropped 2.0% with 61 of 65 equity components losing.
Within the Dow Jones Industrial Average, Goldman Sachs Group Inc.’s shares recorded the biggest losses, as it fell $13.49, or 3.2%.
Shares of JPMorgan Chase & Co. lost 2.3%, Bank of America Corp. dropped 3.0%, Citigroup Inc. slid 3.4% and Wells Fargo & Go. shed 2.9%.
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