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Daily Market Commentary 8th December 2023

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The EU GDP growth for Q3 came in as expected, contacting 0.1%, confirming the recessionary conditions European economies are operating in. German Industrial Production contracted 0.4%, reflecting the continued economic woes of the supposed ‘engine-room’ of Europe. The ECB would be pleased with the direction of inflation, at the cost of a recession, but this does offer the prospects of interest rate relief in 2024. Oil prices have tumbled in recent days, which is welcome news for Europe, who are heavily dependent on imported energy. Putin has made a tour of Middle Eastern nations this week, so expect some new announcements regarding oil supply and thus prices. The US Challenger Jobs Report showed an increase in corporate Job cuts, following weaker numbers from the ADP and Jolts job reports and ahead of the all-important Non-Farm Payrolls. The US Dollar eased, with the EUR regaining 1.0800, while the GBP looks to push 1.2600.

The real mover in currency markets was the Japanese Yen, which surged to 141.60 in European trade, as rumours swirled that the Bank of Japan was set to completely change monetary policy. The Central bank is expected to end negative interest rates, at the same time as the Fed is in a ‘dovish’ mode, causing the surge in the Yen. The softer reserve allowed the AUD to test 0.6600, while the NZD broke back above 0.6159. All eyers are now on tonight’s Non-Farm Payroll number.

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