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12/16/2021

EUR/USD

The European currency is showing flat dynamics against the US dollar in the Asian session, consolidating near 1.1300. Market activity remains subdued as traders await the publication of the results of today's meeting of the European Central Bank (ECB) on interest rates. It is assumed that the European regulator will not change the current parameters of monetary policy, but the updated forecasts and comments from officials will be very important, especially in light of the fact that the US Federal Reserve has tightened its rhetoric. The day before the American regulator accelerated the pace of reduction of the quantitative easing (QE) program, planning to complete it in full by March 2022. Next year, the US Fed also expects three rate hikes by 0.25 basis points, but the nature of the growth of the rate curve will depend on the dynamics of the labor market. The macroeconomic statistics from the US published yesterday somewhat disappointed investors, ultimately not allowing the dollar to consolidate at new local highs. Retail Sales in November fell sharply from 1.8% to 0.3%, while market forecasts assumed a slowdown to only 0.8%.

GBP/USD

The British pound is trading mixed against the US currency during the morning session, holding close to local highs from December 7. Today investors are awaiting the results of the meetings of the European Central Bank (ECB) and the Bank of England, so the activity in the market remains rather low. At the same time, traders are actively discussing the minutes of the US Fed meeting, released the day before. The American regulator, as expected, went to accelerate the pace of curtailing the quantitative easing (QE) program, hoping to start raising interest rates faster in 2022. At the same time, the Chairman of the US Fed, Jerome Powell, noted that the regulator will move on to the next step in tightening monetary policy only upon reaching full employment in the American labor market. Additional support for the pound yesterday was provided by optimistic macroeconomic statistics from the UK. The Consumer Price Index rose 0.7% in November after rising 1.1% in October. Real dynamics turned out to be noticeably higher than the expected slowdown to 0.4%. On an annualized basis, consumer inflation accelerated from 4.2% to 5.1%, also beating forecasts of 4.7%.

AUD/USD

During the Asian session, AUD/USD declines slightly, holding close to the local highs from December 10. The day before, the instrument showed positive dynamics, despite the expected decision of the US Federal Reserve to accelerate the curtailment of the quantitative easing (QE) program, which could potentially lead to a faster increase in interest rates in the US. The decision did not come as a surprise, since it was easily traced in the rhetoric of officials, and therefore the reaction of the American currency was restrained. Investors were much more concerned about the sharp drop in US retail sales in November from 1.8% to 0.3%. Today the instrument is supported by the statistics on the labor market from Australia. The Employment Change in the country in November rose sharply by 366.1K after a decrease of 46.3K last month. Analysts were counting on more modest growth of 200K new jobs. At the same time, the Unemployment Rate for the same period decreased significantly from 5.2% to 4.6% with the forecast of a fall to 5.0%.

USD/JPY

The US dollar shows uncertain gains against JPY in Asian trading, testing 114.00 for a breakout. USD/JPY is updating local highs from November 26, receiving support from the results of the US Fed's meeting held the day before. The regulator made the quite expected decision to accelerate the reduction of the quantitative easing (QE) program, which may now be fully completed by March 2022. The Chairman of the US Fed, Jerome Powell, noted that the national economy no longer needs such significant incentives, but the regulator continues to closely monitor the situation, since risks are still present. In addition, the official said that the start of the rate hike is possible after the US labor market reaches full employment. Macroeconomic statistics released today in Japan did not provide any tangible support to the yen. Export volumes in November increased by 20.5% after increasing by 9.4% in October. Imports added 43.8% after rising 26.7% in October. The trade deficit in November increased from 68.5B to 954.8B yen.

XAU/USD

Gold prices are showing corrective gains during the Asian session, again testing 1780.00 for a breakout. The day before, the quotes of the asset dropped sharply and updated the local lows of October 12 amid tightening of monetary policy by the US Federal Reserve. As expected, the Chairman of the department, Jerome Powell, announced acceleration in the pace of the withdrawal of the quantitative easing (QE) program from 15B to 30B dollars per month, which will allow it to be fully completed in March 2022. In addition, the regulator slightly revised its plans for the growth of rates and now expects three increases next year. One way or another, gold did not manage to consolidate at new local lows, and closer to the end of the afternoon session, the instrument completely moved into the green zone. Today, the European Central Bank (ECB) and the Bank of England will take over the baton of regulators' meetings, and the US will release macroeconomic statistics on industrial production and the dynamics of jobless claims.

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