Daily Market Update 10/12/2021


Main Headlines:

A strong economic recovery and persistent labour shortage pushed jobless claims in the US to their lowest level in 52 years last week, just 18 months after the pandemic prompted six million workers to file for unemployment in one week. State unemployment offices received 184,000 initial jobless claims on a seasonally adjusted basis in the week ending December 4. Economists have cautioned that claims data are subject to seasonal fluctuations over the holiday period that can distort weekly readings. Dismissals have slowed as employers compete to hire and retain staff, with Americans quitting their jobs at historically high levels.

The UK economy grew less than forecast in October as shortages of materials hit manufacturing and construction, and a further loss of momentum now seems inevitable with consumers facing fresh restrictions. GDP grew 0.1%, compared with 0.6% in September. In October, manufacturing flat-lined and construction shrank as both sectors continued to experience shortages of materials and components. The potential hit to consumer spending has left traders all but convinced that the Bank of England will refrain from raising interest rates until February. Until recently, a December hike was fully priced in due to acute labour shortages driving up wages and inflation.

Markets

GBP

Sterling is weaker against most major currencies this morning. Boris Johnson is facing a major Conservative rebellion over Covid-19 restrictions next week, with party unrest playing out ahead of a highly problematic by-election in North Shropshire, where the Liberal Democrats hope to overturn a 23,000 Conservative majority. Three government parties that took place last year when London was under stringent coronavirus restrictions are to be investigated by the UK’s top civil servant. Meanwhile, the UK is battling its worst-ever outbreak of avian flu after a cull of poultry failed to halt the spread of the virus brought in by migratory birds.

EUR

The euro is lower versus the dollar and higher versus the pound overnight. France’s President Emmanuel Macron has called for the EU to stand up for itself as a strategic and economic power in a crisis-ridden world by securing its external borders and controlling clandestine migration, deepening defence co-operation and investing in high-tech industries. Macron called for a reform of the 26-nation Schengen zone and an improved emergency system to send security forces to guard external frontiers. Elsewhere, the European Commission will start legislating within days to change the rules on medicines to prevent an effective ban on many drugs in Northern Ireland.

USD

The dollar is stronger against most majors in the early morning trade. The US Senate passed legislation creating a fast track to raising the nation’s debt ceiling, paving the way for Congress to act next week to eliminate the risk of a default. The bill gives the Democratic majority one-time authority to raise the country’s borrowing limit in a separate piece of legislation without threat of a GOP filibuster. Meanwhile, White House economic adviser Brian Deese said November’s inflation report won’t account for recent declines in the cost of energy and commodities, in an effort to downplay data that is sure to show a surge in consumer prices.

Ballinger & Co. Morning Report- 10th December 2021



Today’s Rates

GBP>EUR – 1.1702

GBP>USD – 1.3205

EUR>USD – 1.1281

GBP>CAD – 1.6793

GBP>AUD – 1.8467

GBP>SEK – 11.965

GBP>AED – 4.8487

GBP>HKD – 10.300

GBP>ZAR – 21.166

GBP>CHF – 1.2197

 

 Today’s Calendar           

·      8:00 a.m.: U.K. Oct. GDP, trade balance, industrial production

·      8:00 a.m.: Germany Nov. CPI

·      8:00 a.m.: Norway Nov. CPI

·      10:05 a.m.: ECB’s Lagarde, Bundesbank’s Weidmann, BDF’s Villeroy on panel

·      10:30 a.m.: BOE inflation expectations survey

·      11:00 a.m.: ECB’s Panetta speaks

·      2:00 p.m.: Russia Oct. trade balance

·      2:30 p.m.: U.S. Nov. CPI

·      3:40 p.m.: ECB’s Elderson speaks

·      7:00 p.m.: Baker Hughes U.S. rig count

·      G-7 foreign ministers meeting in Liverpool

·      Sovereign debt ratings: Austria, Netherlands, Spain, Malta, U.K.

·      Corporate Events

·      Earnings include Academy Sports & Outdoors, Wheels Up Experience

·       Daimler Truck Frankfurt IPO

  

Today’s Highlights

·       Forex Today: Caution prevails ahead of all-important US inflation

·       EUR/USD Analysis: Traders await US CPI before placing near-term directional bets

·       GBP/USD holds comfortably above 1.3200 mark, moves little post-UK macro data

·       US CPI Preview: Forecasts from nine major banks, more acceleration?

 (https://frank-exchange.com/)

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