Euro Boosted This Week In Contrast to Weaker Dollar

Lebanese Forex Market

To-date, the Lebanese Pound (LBP) remained steady within the official range of USD/LBP 1,514 to 1,514.5, with a mid- price of USD/LBP 1,514.25 by December 16, 2022.

Meanwhile, on the parallel market this week, the Lebanese national currency has been wavering around 42,960 LBP/USD with a minimum of 42,400 and a maximum of 43,500. Lebanon has been undergoing hyperinflation as a result of an ongoing economic crisis, hence recent presidential vacuum, along with complete inaction and lack of effective political will putting additional pressure on the national currency which is projected to register further depreciation until a well-defined structural reform plan would be on the horizon.

As for the Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week €/LBP 1,590.11 by December 09, 2022 to €/LBP 1,601.76 by December 16, 2022. Moreover, the Nominal Effective Exchange Rate (NEER) of the Lebanese pound decreased slightly by 0.01% weekly to stand at 170.01 points on December 16, 2022.

International Forex Market

On Friday, the US dollar dropped against its major competitors, as the dollar index was trading 0.35% lower compared to last week at 104.44 as a result of market reaction towards the Fed’s interest rate 0.5 percentage points hike at the end of its two-day meetings this week. This is projected to slow down the economy pushing projected GDP to reach 0.5% for 2023, hardly above what would be considered a recession.

Same for the European Central Bank this week, that added another 50 bps in order to tapper double digit inflation in the Eurozone. This move boosted the Euro against the dollar by 0.73% to $1.0625. In contrast, the Pound was on the back foot by the end of this week as a risk-off mood in markets weighs on the British currency. As such, the GBP dropped by 0.55% to $1.2173 down from last week $1.2240.

Concerning the Japanese currency, the Yen traded at 137.05 this Friday December 16, 0.58% higher from last week previous 136.26. Meanwhile, the Chinese currency appreciated by the end of this week to reach $6.9706 backed by China’s policy outlook to expand the use of Yuan in energy deals especially with GCC. Finally, the Canadian Dollar traded at 1.3652 this Friday December 16, increasing by 0.10% compared to the previous week of December 9.

Commodities

Gold prices was on track for a weekly decline by 0.82% to stand at $1,775.99/ounce on December 16, 2022 compared to $1,790.63/ ounce last week after the Fed affirmed continuing its aggressive monetary tightening policy, triggering recessionary fears which would keep the dollar supported despite its weekly loss this week. However, Gold would eventually resume its safe haven position once traders feel a slower hawkish policy by the Fed.

Crude oil’ prices recorded a significant jump and ended the week 12.31% higher to reach $80.77 on December 16, 2022 compared to the previous week of December 9. The market felt support from International Energy Agency projections of Chinese oil demand recovering as China eased Covid19 restrictions. Moreover this week, OPEC held its forecasts for global demand growth for oil by 2.55 million barrels per day in 2022 and 2.25 million barrels per day in 2023 driven by quite potential upside.