Daily Market Update 17/11/2021

Main Headlines:

US Treasury Secretary Janet Yellen warned again that the US government risks a cash crisis again unless Congress acts quickly again to adjust the debt ceiling, despite having done so only a month ago in October. Yellen wrote a letter to congressional leaders on Tuesday saying that the country could be left with “insufficient remaining resources” after December 15, a date she cautioned could change due to “unavoidable variability” in the government’s cash flows. In October, the Senate voted to extend the public borrowing limit by $480bn after 11 Republican senators crossed the floor to reach the filibuster target. It is unclear if the same will happen again following Senator majority leader, Chuck Schumer’s criticism of raising the debt ceiling.

UK prices have soared at the fastest rate for almost ten years, as the cost of living surged by 4.2% in October due to rising fuel and energy costs, according to consumer price index data released by the ONS on Wednesday morning. The consumer price index measure of inflation is now more than double the Bank of England’s target. According to the ONS, the costs of transport, gas and electricity bills and second-hand cars all climbed. The Bank of England has said it may have to increase interest rates “in the coming months” to tackle the problem. October’s reading is far higher than the 3.1% rise recorded in the year to September and ahead of economists’ forecasts.

Markets

GBP

Sterling is well-bid against most majors in overnight trade. UK Prime Minister Boris Johnson has written to the Speaker of the House of Commons to propose cross-party reforms to the standards system in Parliament before Labour leader Keir Starmer could do the same at a press conference. The PM’s arm was forced into proposing a ban on MPs working as paid political consultants or lobbyists to close a sleaze scandal that has engulfed Westminster. The U.K.’s unemployment rate dropped from 4.7 percent to 4.3 percent over the three months. The strong numbers make it more likely the Bank of England will start tightening policy sooner rather than later. Staff at 58 UK universities will go on strike between 1 and 3 December, causing further disruption for students in the run-up to Christmas.

EUR

The euro is lower against most majors overnight. France will not use its EU presidency to push other governments to copy its playbook and adopt a short-haul flight ban, following COP26. Transport Minister Jean-Baptiste Djebbari defended a national law prohibiting domestic flights that can be replaced by a rail journey of less than two-and-a-half hours, despite criticism from environmental groups, which argue it doesn’t go far enough. Germany’s energy regulator said it had “temporarily suspended” certification of the Nord Stream 2 pipeline, sparking a rise in UK and European gas prices. Kremlin-backed Gazprom chose to create a German subsidiary branch that was not yet properly set up according to German law.

USD

The dollar is lower against sterling and higher against the euro in early morning trade. Joe Biden, US president, said he expects to announce his pick for chair of the Federal Reserve in “about four days”, with less than three months until Jay Powell’s term expires. The choice is between Powell and Lael Brainard, a governor who has the backing of progressive members of the Democratic Party for her more stringent stance on regulatory matters. Joe Biden and Xi Jinping have agreed to hold talks aimed at reducing tensions, as US anxiety grows at China’s expanding nuclear arsenal and its recent test of a hypersonic weapon. Jake Sullivan, US national security adviser, said the US and Chinese presidents had discussed the need for nuclear “strategic stability” talks and hoped to host them soon.

Ballinger & Co. Morning Report–17th November 2021


Today’s Rates

GBP>EUR – 1.1881

GBP>USD – 1.3435

EUR>USD – 1.1311

GBP>CAD – 1.6873

GBP>AUD – 1.8460

GBP>SEK – 11.913

GBP>AED – 4.9339

GBP>HKD – 10.466

GBP>ZAR – 20.874

GBP>CHF – 1.2521

 Today’s Calendar           

·       CAD    BoC Consumer Price Index Core (YoY)(Oct)   

 

Today’s Highlights

·       Forex Today: Dollar extends rally, markets await UK inflation data, Fedspeak

·       GBP/USD Forecast: Bulls eye Brexit headlines after hot UK inflation data

·       Brexit News: UK’s Frost says N. Ireland Protocol deal ‘can be done’ with EU before Christmas

·       Consumers to the Rescue: US economy improves after the weak third quarter

 (https://frank-exchange.com/)

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