EURUSD is “coolheaded”. Overview for 13.12.2021

EURUSD remains stable; investors are focused on the US Fed meeting. 

The major currency pair is neutral early in the week. The current quote for the instrument is 1.1316.

Last Friday’s statistics on the US Consumer Price Index were quite high, just as expected. The indicator showed 6.8% y/y in November. On MoM, inflation was 0.8%, higher than expected, after being 0.9% the month before. 

The US Fed now considers high inflation as a new reality instead of a temporary thing, that’s why such high readings didn’t trigger any serious reactions. 

Market players’ attention is slowly switching to the December meeting of the American regulator scheduled for this week. The Fed is assumed to announce its decision (based on the latest inflation reports, among other things) to speed up the closure of its QE programme by at least fifty per cent. It means that the program may be completed as early as March 2022. The regulator will require some time to collect and analyse data. As a result, it may start discussing the benchmark interest rate hike in May or June. 

Average market expectations for 2022 imply that the rate might be raised by 50 basis points. Capital markets are quite okay with this number, which may easily help the “greenback” to get stronger.