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
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.The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.