Daily Market Update 29/10/2021

Main Headlines:

The White House released a $1.85 trillion framework designed to show progress in months of social spending and climate talks that fell short of persuading progressives to quickly approve a parallel, roughly $1 trillion infrastructure bill. President Biden met with House Democrats in the morning to pitch them on the new framework, a far slimmer piece of legislation than the $3.5 trillion package the party originally had outlined. Democrats have been rushing to complete negotiations on the bill so that they can also move forward with the public-works legislation, which passed the Senate over the summer but has languished in the House. Party leaders initially signalled they wanted to hold a vote on the infrastructure bill later Thursday but abandoned that plan in the evening in the face of progressive opposition.

A number of UK think-tanks suggest that the Budget will leave millions of British citizens worse off, failing to prevent a squeeze on disposable incomes whilst taxes and costs of living surge ahead. The plans set out on Wednesday represented a “real and substantial boost” to public spending, the Institute for Fiscal Studies think-tank said on Thursday, but a cocktail of high inflation, tepid pay growth and sharp tax rises means households face years of stagnating living standards. Meanwhile, the Resolution Foundation, another think-tank, published analysis showing that households would on average be paying £3,000 more each year in taxes by 2024-25, with the biggest impact felt by higher earners.

Markets

GBP

Sterling is strong against most majors in overnight trade. The UK has condemned “unjustified” threats from France and summoned the country’s ambassador in an escalating row over post-Brexit fishing rights. Foreign Secretary Liz Truss is calling for talks later, asking Catherine Colonna to explain “disappointing and disproportionate threats”. A British trawler was seized by France and another fined during checks off Le Havre on Thursday. French authorities said the detained vessel did not have a licence. However, Environment Secretary George Eustice has insisted the European Union did grant a licence to the trawler and said it was “unclear” why, according to reports, it was subsequently withdrawn from the list given to the EU. 

EUR

The euro is lower against most majors overnight. The EU will today formally recognize the U.K.’s Covid certificates for travel, a positive move for UK citizens travelling in the bloc who have been relying on PCR tests, antigen tests and NHS Covid Passes on a country-to-country basis. UK citizens cannot get an EU Covid-19 Green certificate, so recognition of UK Covid certificates is vital. The ECB Governing Council has not announced a hike in interest rates at a monthly monetary policy meeting, despite rising inflation across the EU. Ursula von der Leyen, The European Commission President, on Thursday publicly presented Poland a compromise that would unlock up to €36 billion in recovery funding for Polish citizens, outlining at a press conference three demands for changes to the country’s judicial system that would ease a deal between Warsaw and Brussels.

USD

The dollar is higher against the euro and lower against sterling in early morning trade. President Biden has arrived in Europe for the G20 Summit in Rome and COP26 Summit in Glasgow in the coming weeks. He landed in Rome early on Friday for a G20 summit where plans for a global minimum tax will be on the agenda. America’s second Catholic president will also meet Pope Francis at the Vatican on Friday. He will head to Scotland on Sunday night for the United Nations climate conference, COP26, in Glasgow. Facebook has changed its corporate name to Meta as part of a major rebrand. The company said it would better “encompass” what it does, as it broadens its reach beyond social media into areas like virtual reality (VR). The change does not apply to its individual platforms, such as Facebook, Instagram and Whatsapp, only the parent company that owns them.

Ballinger & Co. Morning Report–29th October 2021

Today’s Rates

GBP>EUR – 1.1830

GBP>USD – 1.3777

EUR>USD – 1.1651

GBP>CAD – 1.7004

GBP>AUD – 1.8286

GBP>SEK – 11.768

GBP>AED – 5.0621

GBP>HKD – 10.716

GBP>ZAR – 21.092

GBP>CHF – 1.2561

  Today’s Calendar           

·       EUR    Gross Domestic Product (QoQ)(Q3)

·       EUR    Consumer Price Index – Core (YoY)(Oct)

·       EUR    Gross Domestic Product s.a. (QoQ)(Q3)

·       EUR    Consumer Price Index (YoY)(Oct) USD

·       EUR    Gross Domestic Product s.a. (YoY)(Q3)    Today’s Highlights

·       Forex Today: Dollar steadies, eyes on European data, US PCE inflation report

·       EUR/USD Forecast: Can euro crack 1.1700 ahead of the weekend?

·       EUR/GBP keeps the red post-Eurozone data, downside seems limited

·       Bitcoin Weekly Forecast: BTC to hit point of max pain before breaking out to $100,000

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