Daily Market Update 02/11/2021

Main Headlines:

President Joe Biden on Monday sought to assure world leaders the United States would fulfill its promise to slash greenhouse gas emissions in half by the end of the decade, but a setback at home heightened uncertainty about his ability to follow through. Biden pledged earlier this year that the US would cut its greenhouse gas emissions 50-52% by 2030 compared with 2005 levels. The White House has expressed confidence it can achieve that, even as a bill that would help further those goals languishes in Congress, with a key Democratic senator Joe Manchin withholding his support of the $1.75 trillion legislative framework that is central to achieving the president’s emissions reduction goals, for now.

PM Johnson is scheduled to announce the particulars of a deforestation agreement this morning with the president of Indonesia, Joko Widodo at COP26 as yesterday, leaders of more than 100 countries vowed to end deforestation by 2030, seeking to preserve forests crucial to absorbing carbon dioxide and slowing the rise in global warming. The pledge will demand “transformative further action,” and it was accompanied by several measures intended to help put it into effect. But some advocacy groups criticized them as lacking teeth, saying they would allow deforestation to continue. The governments committed $12 billion and private companies pledged $7 billion to protect and restore forests in a variety of ways, including $1.7 billion for Indigenous peoples.

Markets

GBP

The pound is lower versus most majors in the early morning trade. Rishi Sunak, the Chancellor is set for a “wild ride” to reduce his deficit under new rules announced at the budget, according to the Government’s Office for Budget Responsibility (OBR). Officials from the body warned that the amount of wiggle room for Chancellor Rishi Sunak to cut the deficit in the next three years and reduce national debt was the second-smallest level on record. They also told MPs on the Treasury Select Committee they expect inflation to fall in between six months and a year but said the number of people leaving the workforce could keep it higher.

EUR

The euro is unchanged toward the dollar and stronger than the pound this morning. PM Johnson told the EC president that French threats to hold up British exports in response to a dispute over fishing licences were “completely unjustified”, as the ports of Calais and Boulogne warned of an impending disaster. During a meeting with Ursula von der Leyen at the G20 summit in Rome, the PM raised his “concerns about the rhetoric from the French government”. The UK’s Brexit minister, David Frost, also expressed his “concern and surprise” over a letter from the French prime minister, Jean Castex, to Von der Leyen in which he sought an EU-level response on the alleged shortfall in licences for French vessels wanting to operate in the coastal waters of the UK and Jersey.

USD

The dollar is stronger than the pound and unchanged toward the euro overnight. Volatility in US bonds is surging in stark contrast to the relatively placid run for equities, leading some analysts to warn over the danger that central banks trigger a spasm of volatility in Wall Street’s stock market. Fixed income markets have been jolted by fears that rising inflation will force monetary policymakers into scaling back stimulus programmes, but stocks have largely shrugged off these concerns, with Wall Street’s main equities barometers rallying to a series of new record peaks last week. The gap between measures of the near-term, derivatives-implied volatility of the S&P 500 benchmark and US Treasury bonds has widened at its fastest rate in a decade, according to Bank of America.

Ballinger & Co. Morning Report–02nd November 2021

Today’s Rates

GBP>EUR – 1.1765

GBP>USD – 1.3638

EUR>USD – 1.1592

GBP>CAD – 1.6920

GBP>AUD – 1.8266

GBP>SEK – 11.632

GBP>AED – 5.0072

GBP>HKD – 10.612

GBP>ZAR – 20.967

GBP>CHF – 1.2437

Today’s Calendar       

·       NZD    Employment Change(Q3)

·       NZD    Unemployment Rate(Q3)

Today’s Highlights

·       Forex Today: Dollar retreats modestly, investors move to sidelines ahead of key events

·       EUR/USD Forecast: Recovery to remain limited ahead of Fed meeting

·       GBP/USD: Mildly offered near 1.3650 as Brexit optimism battles pre-Fed, BOE anxiety

·       USD/CAD to extend its slump if terminal rate pricing can be extended – HSBC

 (https://frank-exchange.com/)

This document has been prepared solely for information and is not intended as an Inducement concerning the purchase or sale of any financial instrument. By its nature market analysis represents the personal view of the author and no warranty can be, or is, offered as to the accuracy of any such analysis, or that predictions provided in any such analysis will prove to be correct. Should you rely on any analysis, information or report provided as part of the Service it does so entirely at its own risk, and Frank eXchange Limited/Manor House Foreign eXchange Limited accepts no responsibility or liability for any loss or damage you may suffer as a result. Information and opinions have been obtained from sources believed to be reliable, but no representation is made as to their accuracy. No copy of this document can be taken without prior written permission.

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