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Fed still intends to cut economic stimulus

December 15, 2021

EUR/USD: The euro declined on Monday as the dollar strengthened. However, the moves were limited by overall uncertainty over the Omicron coronavirus variant and ahead of this week’s U.S. inflation numbers. Investors are awaiting U.S. consumer price data on Friday for clues on the Federal Reserve’s monetary policy strategy. The dollar dipped on Friday following a below-forecast jobs report, though the data did little to shake market expectations. The Federal Reserve will accelerate the stimulus reduction and raise interest rates, starting next year. Immediate support is seen at 1.1275. A breakout below could take the pair towards 1.1150.

SELL STOP 1.1275/TP 1.1150/SL 1.1325


GBP/USD: Sterling rose on Monday after Bank of England Deputy Governor Ben Broadbent warned Britain’s tight labor market would add pressure on inflation, reigniting some hopes for an interest rate hike. Sterling strengthened after Broadbent said Britain’s tight labor market was likely to be a more persistent source of inflation. He said inflation might comfortably exceed 5% in April next year and that transitory inflation should be understood as referring to the next 20 months. After Friday’s slump, sterling strengthened 0.1% versus the dollar, to 1.3240, remaining not far from a 2021 low of 1.32 touched last week. Immediate support is located at 1.3250. A breakout below this barrier could take the pair towards 1.3150.

SELL STOP 1.3250/TP 1.3150/SL 1.3280


USD/CAD: The Canadian dollar strengthened against U.S. dollar on Monday as oil prices rose and attention turned to a Bank of Canada interest rate decision this week, with the currency recovering from its lowest level in more than two months. The price of oil, one of Canada’s major exports, rose on hopes that the Omicron coronavirus variant would have a less damaging economic impact if its symptoms proved mild and on the prospects of an imminent rise in Iranian oil exports. If oil prices can maintain their uptrend, the Canadian dollar will have a good reason to grow. Immediate support is found at 1.27. A breakout below this mark could take the pair towards 1.26.

SELL STOP 1.27/TP 1.26/SL 1.2730