Daily Market Update 15/12/2021


Main Headlines:

US lawmakers have voted to raise the government borrowing limit by $2.5tn, in an eleventh-hour effort to avert default before the end of the year. The Senate voted on Tuesday evening to lift the debt ceiling to $31.4tn in a party-line vote. The House of Representatives later passed the same measure shortly after midnight. The votes came just before a December 15 deadline set by Janet Yellen, US Treasury secretary, who has for weeks warned about the risks of a government default. Republicans and Democrats have been at odds over the debt ceiling, with the GOP insisting that President Joe Biden’s party “go it alone” in lifting the borrowing limit while blaming Democrats for reckless spending.

Consumer price inflation in the U.K. reached 5.1 percent in the 12 months to November, the highest rate since September 2011, according to data released Wednesday by the Office for National Statistics. The same measure of inflation stood at 4.2 percent in October, with fuel and retail products driving the “broad based” surge. Hotel and restaurant prices declined in the period. Chancellor Rishi Sunak said that “we know how challenging rising inflation can be for families and households,” pointing to government aid for the vulnerable through the winter. The increase in inflation was higher than expected by financial experts and comes a day before the Bank of England reveals its latest interest rate decision. Were it not for a rapidly spreading Omicron variant of the coronavirus, a rate hike would be on the cards to bring inflation closer to the BoE’s target of 2 percent. However, uncertainty surrounding the potential effects of the virus is casting doubt on the central bank’s willingness to step in.

Markets

GBP

Sterling is well-bid against most majors overnight. Boris Johnson has won backing for Covid passes in England, despite the biggest revolt by Tory MPs since he became PM. A total of 99 Conservatives voted against the government, but the measure was passed by a majority of 243 thanks to Labour support. So, NHS Covid passes, showing a recent negative test or full vaccination, must be shown to get into many large venues, including nightclubs, from Wednesday. The U.K. government is failing to uphold the rights of EU nationals, under the EU Settlement scheme, who lived in Britain for fewer than five years and are now trying to secure residence status, an official watchdog warned. The Independent Monitoring Authority (IMA), which seeks to ensure the rights of EU citizens settled in the U.K. before Brexit are respected, announced Tuesday that it is launching judicial review proceedings against the Home Office.

EUR

The euro is lower against sterling and higher against the dollar overnight. Maltese MEP Roberta Metsola’s odds of becoming the next European Parliament president have shortened dramatically, as incumbent David Sassoli told colleagues he will not run again in January. EU leaders arrive in Brussels today for two days of meetings, with the threat from a resurgent Russia and hybrid attacks by Belarus top of the agenda. Ukraine’s President Volodymyr Zelenskiy is due to meet French President Emmanuel Macron and new German Chancellor Olaf Scholz in a “Normandy 3” format (i.e. minus Russia) at 3 p.m. NATO chief Jens Stoltenberg, whose term expires in the fall, is officially on the job market. The former Norwegian PM has put his name forward to lead the Norwegian central bank — but is up against 21 other candidates. Italy’s Health Minister Roberto Speranza signed an ordinance Tuesday that will require a negative coronavirus test for travellers arriving from other EU countries. Currently, EU travellers can enter the country by showing their digital vaccination certificate. Under the new rules, they will have to show a negative test as well.

USD

The dollar is lower against major currencies in early morning trade. Reported Covid-19 deaths in the U.S. have surpassed 800,000, with the coronavirus pandemic set to continue into the new year. Data from Johns Hopkins University on Tuesday showed the U.S. has exceeded 800,000 Covid-19 fatalities, close to two years after the first deaths from the disease were recorded in the country in February 2020. The House voted unanimously Tuesday to ban imports from China’s Xinjiang region over concerns about the use of forced labour, after a bipartisan agreement was reached with the Senate on the language of the legislation. The bill—the Uyghur Forced Labour Prevention Act—is expected to pass the Senate this week.

Ballinger & Co. Morning Report- 15th December 2021

Today’s Rates

GBP>EUR – 1.1773

GBP>USD – 1.3271

EUR>USD – 1.1274

GBP>CAD – 1.7068

GBP>AUD – 1.8610

GBP>SEK – 12.105

GBP>AED – 4.8731

GBP>HKD – 10.351

GBP>ZAR – 21.428

GBP>CHF – 1.2268

Today’s Calendar

·      8:00 a.m.: U.K. Nov. CPI, PPI, retail price index

·      8:45 a.m.: France Nov. CPI

·      9:00 a.m.: Spain Nov. CPI

·      9:00 a.m.: Turkey central government budget balance

·      10:00 a.m.: Italy Nov. CPI

·      10:30 a.m.: U.K. Nov. house price index

·      12:00 p.m.: Norwegian PM’s Christmas press conference

·      4:30 p.m.: EIA U.S. oil inventory report

·      5:00 p.m.: Russia 3Q GDP

·      8:00 p.m.: FOMC rate decision

·       8:30 p.m.: Powell news conference   



Today’s Highlights

·       Breaking: UK annualized CPI jumps to 5.1% in November vs. 4.7% expected

·       GBP/USD Price Forecast 2022: Brexit and the BOE set to pull in different directions

·       Germany’s Scholz: Economy faces biggest transformation in a century to tackle climate change

·       UK’s Shapps: One reason for high inflation is the labor market is tight

 (https://frank-exchange.com/)

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