Daily Market Update 26/10/2021

Main Headlines:

President Biden will allow all international travellers to enter the US as long as they have received any vaccine authorised by the WHO, even the relatively untested Chinese-made Sinovac and Sinopharm jabs, from 8 November. Yesterday, The US president signed a presidential proclamation detailing the country’s new international travel rules, which will replace the patchwork of blanket bans that has been in place since the beginning of the pandemic. Under the rules, which will take effect in two weeks’ time, anyone who has been inoculated with one of the seven vaccines authorised by the WHO will be allowed to enter the US by land or air.

Chancellor Sunak will use his Budget to announce a pay rise for workers on low incomes and end a pay freeze for 5m public sector staff, but Labour warned that households risked being left worse off as price rises and tax increases bite. Low-paid workers in the UK will receive a 6.6% pay rise from next April as ministers seek to soften the impact of rising living costs by lifting the national living wage. Government officials confirmed that the chancellor will use his Budget on Wednesday to formally announce plans to increase the wage, which applies to workers aged 23 and over, from £8.91 an hour to £9.50.

Markets

GBP

The pound is higher than the euro but lower than the dollar overnight. The UK’s three spy agencies contracted Amazon’s cloud computing arm (AWS), to host classified material in a deal aimed at boosting the use of data analytics and artificial intelligence for espionage. The procurement of a high-security cloud system has been championed by GCHQ, the UK’s signals intelligence body, and will be used by sister services MI5 and MI6, as well as other government departments such as the Ministry of Defence during joint operations. The contract is likely to ignite concerns over sovereignty given that a vast amount of the UK’s most secret data will be hosted by a single US tech company.

EUR

The euro is lower than most majors this morning. Christine Lagarde will face an unusual test this week when the ECB President is likely to push back against a growing belief among investors that the ECB is underestimating future inflation and could raise interest rates next year. Rising inflation is relatively new ground for the ECB, which for much of the past decade has consistently undershot both its own 2% target and its forecasts on inflation. Yet the ECB governing council is not expected to change policy after it meets on Thursday. Instead the main focus will be on what Lagarde says afterwards about the inflation outlook and what this means for when it might raise rates.

USD

The dollar is well bid against most majors in the early morning trade. Leading credit card lenders in the US are welcoming signs that customers are poised to increase their borrowings after paying down balances during Covid-19. Depositors are reducing the cash cushions they built up during the crisis with the help of government stimulus payments and debt forbearance programmes. Any increase in credit card borrowing would be good news for the banking industry, which has struggled to find profitable uses for the cash piling up on its balance sheets amid tepid loan demand. All the lenders said they expected payments rates to continue to decline.

Ballinger & Co. Morning Report–26th October 2021
 

Today’s Rates

GBP>EUR – 1.1878

GBP>USD – 1.3783

EUR>USD – 1.1604

GBP>CAD – 1.7054

GBP>AUD – 1.8367

GBP>SEK – 11.882

GBP>AED – 5.0608

GBP>HKD – 10.713

GBP>ZAR – 20.285

GBP>CHF – 1.2709

  Today’s Calendar           

·       EUR      ECB Bank Lending Survey

·       USD    Housing Price Index (MoM)(Aug)

·       USD    Housing Price Index (MoM)(Aug)

·       USD    New Home Sales (MoM)(Sep)

·       USD    Consumer Confidence(Oct)

·       NZD    Trade Balance NZD (YoY)(Sep)

·       NZD    Exports(Sep)

·       NZD    Imports(Sep)

  Today’s Highlights

·       Forex Today: Dollar keeps firm footing, key events awaited

·       EUR/USD Forecast: Are euro bulls giving up already?

·       GBP/USD hovers around 1.3750, Brexit talks in London eyed

·       Germany’s Altmaier: Will cut 2021 GDP forecast, raise 2022 GDP forecast

(https://frank-exchange.com/)

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