Main Headlines:
The House of Representatives has approved a debt ceiling measure in the lower house, designed as a short-term increase in America’s borrowing limit, averting a potential debt default looming as early as next week. The vote in the Democratic-controlled lower chamber now paves the way for President Biden to quickly sign the measure into law, following approval of the measure in the Senate last week. This piece of stop gap legislation will avert an immediate crisis over the debt limit, creating a new deadline in December to stave off a potential default. Eleven republicans helped to advance the legislation in the Senate previously, however, Republican party leader Mitch McConnell has warned the same will not happen ahead of the December deadline.
The UK economy will lag behind other G7 nations, according to an IMF forecast stating that coronavirus crisis is set to bring more long-lasting damage to the UK economy, which will still be 3% smaller in 2024 whilst other countries in the bloc will experience a greater economic bounce back. Ahead of the Autumn Budget this month, the IMF predicts that Chancellor Rishi Sunak will not be able to point to a sustained fall in public debt by the middle of the decade. The Chancellor may have to redirect incomes from raising national insurance, away from health and social care towards paying for the legacy of the pandemic and propping up the UK’s economic recovery to match fellow G7 nations.
Markets
GBP
Sterling is higher against the dollar and lower against the euro in overnight trade. The EU will offer to remove more than half of the checks on goods arriving in Northern Ireland from the British mainland, despite protests from France. The U.K.’s David Frost detailed that the EU’s decision not to go even further and rewrite the NI Protocol will be “an historic misjudgement” and the “fractious” relations between the two sides will not reach an equilibrium without compromise from Brussels. The UK is edging towards an economic recovery in August due to an uptick in spending in the arts, entertainment and food sectors across the country experienced a rebound on the previous month. GDP grew 0.4% month on month according to ONS statistics.
EUR
The euro is well-bid against most majors overnight. An announcement is expected today that Vladimir Putin wants to press the EU to tilt away from spot-pricing for natural gas toward long-term contracts favoured by state-run Gazprom. The country is also seeking rapid certification of the controversial Nord Stream 2 pipeline to Germany to boost gas deliveries. In Belgium, plans to replace gas-fired power plants with nuclear reactors by 2025 has caused a fracture within the ruling coalition, as the Greens are pitted against the Liberals on the matter within a seven-party coalition. Six months before the presidential election, French President Emmanuel Macron will unveil “France 2030”, a €30 billion investment plan aimed at reindustrializing the country after the coronavirus crisis, focused on investment in space, biotechnology, culture and nuclear power.
USD
The dollar is lower against most majors in early morning trade. Democratic lawmakers announced that the US will reopen its land borders to Mexico and Canada to vaccinated travellers in November, ending restrictions put in place at the start of the pandemic which have placed strain on bilateral relations. An interpreter who assisted President Biden in Afghanistan to escape a blizzard and possible ambush has been granted a Special Immigration Visa to come to the United States. The Pentagon’s Chief Software Officer resigned due to frustrations at the slow place of technological transformation in the US military and because in his view the country “has already lost on AI to China”. US Covid-19 cases have dropped 22% in the past two weeks and hospitalisations are down by 20%.
Ballinger & Co. Morning Report–13th October 2021
Today’s Rates
GBP>EUR – 1.1789
GBP>USD – 1.3617
EUR>USD – 1.1552
GBP>CAD – 1.6952
GBP>AUD – 1.8534
GBP>SEK – 11.939
GBP>AED – 5.0045
GBP>HKD – 10.594
GBP>ZAR – 20.331
GBP>CHF – 1.2652
Today’s Calendar
· EUR Harmonized Index of Consumer Prices (YoY)(Sep)
· USD Consumer Price Index ex Food & Energy (MoM)(Sep)
· USD Consumer Price Index ex Food & Energy (YoY)(Sep)
· USD FOMC Minutes
· EUR ECB’s Lane speech
· EUR ECB’s Elderson speech
· USD Fed’s Clarida speech
· USD Fed’s Bostic speech
· NZD REINZ House Price Index (MoM)(Sep)
Today’s Highlights
· UK GDP misses estimates with 0.4% in August
· Forex Today: Cautious mood persists as focus shifts to US inflation data, FOMC Minutes
· US CPI Sept Preview: Inflation averaging, what inflation averaging?
· AUD/USD still seen lower at 0.72 on a three-month view – Rabobank
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