Daily Market Update 07/10/2021


Main Headlines:

US lawmakers are approaching a breakthrough on a potential debt ceiling, after Mitch McConnell offered to back an extension of the government’s borrowing limit until December. The potential stop-gap measure offered to support a short-term extension of the country’s debt-limit to resolve investor and corporate fears. Democrats were split on the measure on Capitol Hall, with some immediately dismissing the pressure. Others expressed support for such a measure as a way to avert an economic and financial calamity and refocus their efforts on passing President Joe Biden’s economic agenda.

At the Conservative Party conference in Manchester, Boris Johnson told delegates that he planned to take the UK towards a ‘high-wage, high-skill, high-productivity’ society. He insisted there would be no going back to an old economic model, nor to the days of uncontrolled migration into the United Kingdom. Amid promises to take an ambitious approach to levelling up the prosperity of the United Kingdom across all regions of the country, the PM also tempered his comments by stating it will “take time” to overhaul and bolster the UK economy. The CBI warned that the government would need to deliver on all promises as just high-wages alone without improved productivity would fuel inflation and rising prices.

Markets

GBP

Sterling is well-bid against most majors overnight. A pricing analyst, Cornwall Insights, forecast that that the energy price cap will rise to around £1,660 by next summer. That is about 30% higher than the record £1,277 level for the cap set for winter 2021-22, which began at the start of October. Commemorations are being held to mark the 20th anniversary of the start of UK military operations in Afghanistan. Wreaths were laid in memory of the 457 British personnel killed during the conflict. UK troops left Afghanistan at the end of August, bringing an end to the 20-year war. UK wholesale gas prices hit a record high before falling after Russia said it was boosting supplies to Europe. Russia President Vladimir Putin appeared to calm the market after gas prices had risen by 37% in 24 hours to trade at 400p per therm on Wednesday.

EUR

The euro is lower against sterling and higher against the dollar. Olaf Scholz eyes a narrow path to a German ‘traffic light’ coalition with the Greens and the FDP, after Scholz’s Social Democrats won the German election. If negotiations on a traffic light alliance are successful then it will mark a decisive break from Chancellor Angela Merkel, after 16 years since the centre-right CDU/CSU took power. EU leaders back ‘enlargement’ for the Balkans at an EU summit in Slovenia but have put the breaks on exactly when it may happen. At the centre piece of Slovenia’s EU Council Presidency, Commission President Ursula Von der Leyen proclaimed their support for six Western Balkans nations to join their club, while simultaneously admitting that the entry process was effectively stalled.

USD

The dollar is lower against most majors in early morning trade. Biden plans to meet virtually with Xi Jinping this year. Chinese diplomat Yang Jiechi said Beijing attaches importance to Biden’s recent positive remarks and noted that Washington said it doesn’t intend to contain China or engage in a new cold war. Data today are expected to show the U.S. labor market continues to recover. Consensus sees weekly jobless claims dipping to 348,000, while the latest whisper number sees a smaller drop to 354,000. The U.S. is considering pushing IMF Managing Director Kristalina Georgieva to resign amid an ethics scandal. The fund’s executive board met with Georgieva as part of its ongoing review of a World Bank over allegations that she pressured bank staff to adjust a ranking in China’s favour.

Ballinger & Co. Morning Report–07th October 2021

Today’s Rates

GBP>EUR – 1.1738

GBP>USD – 1.3573

EUR>USD – 1.1564

GBP>CAD – 1.7094

GBP>AUD – 1.8623

GBP>SEK – 11.920

GBP>AED – 4.9849

GBP>HKD – 10.569

GBP>ZAR – 20.249

GBP>CHF – 1.2579

 Today’s Calendar

·       CAD      BoC’s Governor Macklem speech

Today’s Highlights

·       Forex Today: Dollar weakens modestly amid risk flows, markets to remain choppy ahead of NFP

·       EUR/USD Forecast: Remains vulnerable near 14-month lows, eyeing ECB minutes

·       Forex Today: Dollar weakens modestly amid risk flows, markets to remain choppy ahead of NFP

·       GBP/USD rises to 1.3600 amid upbeat mood

  (https://frank-exchange.com/)

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