Currency Note

Testing times for US dollar at start of year 

By Roseanne Bradley January 4th, 2023

The US dollar surged 1.4% against the euro yesterday as market doors opened, but the euro regained most of its strength throughout the course of the day

The pound and euro lost sharply against the US dollar at the start of trading yesterday but have recovered those losses this morning.

Rail strikes continued to wreak havoc on Tuesday morning. While issues remain to be sorted, Downing Street expressed optimism that a solution to the ongoing strikes could be imminent.

On Monday, Kristalina Georgieva, head of the International Money Fund (IMF) warned a third of the global economy will be in recession in 2023.

Speaking on CBS News’ Face the Nation, Georgieva said that this year will be “tougher” than last due to the war in Ukraine, high interest rates and the reappearance of Covid in China which continues to affect the global economy.

On the data front, all eyes were on Germany yesterday as the year-on-year inflation rates came in 8.6% in December 2022.

Yesterday, US Construction spending rose 0.2% in November 2022, up from the revised 0.2% decline in October and against market expectations of a 0.4% contraction.

On British shores, the S&P Global/CIPS UK Manufacturing PMI was revised to 45.3 in December 2022, slightly higher than a preliminary estimate of 44.7 and lower than November’s figure of 46.5.

This morning, France’s annual inflation rate slowed to 5.9% in December 2022, from 6.2% in November and October. This is below preliminary market forecasts of 6.4%.

Today is a busy day for UK data as we expect consumer credit from the BofE, mortgage approvals, mortgage lending.

US markets are poised for ISM Manufacturing PMI, JOLT job openings and FOMC Minutes later this evening.

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GBP: Steady pound at week start

As market doors opened yesterday, the pound made marginal losses against the US dollar but quickly regained its strength throughout the course of the day.

Today, we will hear BoE consumer credit and mortgage lending figures for December which could impact the pound’s position over the coming days.

GBP/USD: the past year

From To



EUR: German inflation eases

The German inflation rate fell from 10% in November to 8.6% in December 2022. This rate was below market forecasts of 9.1% and reflects the lowest rate Germany has seen since August last year when the government’s initiative to lower household natural gas bills came into effect.


USD: A volatile stock market

There was volatility on the US stock market as The Dow lost an almost 200-point gain and crossed into negative territory. Economists believe this may have been buoyed by dip-buying strategies and gloomy prospect of a recession.

In corporate America, Tesla fell almost 15% as the car manufacturer renowned for its electric vehicles missed its 2022 delivery target.

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