December 27, 2024

“Trading in financial markets has been Choppy on Friday, with light activity continuing after the Christmas break. The US is set to release early numbers for November’s Goods Trade Balance and Wholesale Inventories.”

Tim Hallinan – Trading Director

USD

Wall Street’s major indexes barely moved on Thursday, while the US Dollar Index finished the day unchanged. On Friday morning in Europe, the USD Index stayed within a narrow range, and US stock futures dipped into negative territory, indicating a cautious market sentiment. The US Department of Labor revealed on Thursday that initial jobless claims dropped slightly to 219,000 for the week ending December 21, down from 220,000 the previous week. This result was better than the expected 224,000.

GBP

The Pound Sterling lost ground against its major rivals as anticipation increased for a dovish approach from the Bank of England (BoE) in the year ahead. In December, the UK central bank kept its key interest rate unchanged at 4.75%, but an unexpected split vote—where three members favoured cutting rates—signalled the possibility of quicker rate reductions in 2025. Markets are now pricing in a 53-basis-point rate cut for 2025, up from the earlier projection of 46 bps. GBPUSD pair trades sideways on Friday, staying within a narrow range after slight losses on Thursday. Low trading volumes following the Christmas break and a cautious market mood are keeping the pair from making significant moves.

EUR

Boris Vujčić, a member of the European Central Bank Governing Council, stated last week that the ECB may reduce borrowing costs further if the upcoming data aligns with its forecasts. The ECB has already lowered rates four times this year, bringing the deposit rate to 3.0%. Analysts expect the central bank to continue with similar quarter-point reductions, potentially reaching 2.0% by June. EURUSD remains range-bound during the European session this morning. With few fundamental catalysts and low trading volumes due to the holiday-shortened week, the pair struggles to establish a clear direction.

Markets

European stocks saw gains on Friday as regional markets resumed trading after the Christmas holiday break. The pan-European Stoxx 600 index was up by 0.2%, with most sectors and major indices in positive territory. The three main U.S. stock indexes are also in the green for the week, following strong consecutive gains at the start of the shortened holiday week. The S&P 500 has risen 1.8% so far, marking its best Christmas Eve performance since 1974, according to Bespoke. The Dow is up 1.1% this week, while a surge in large-cap tech stocks has driven the Nasdaq Composite 2.3% higher.

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