Daily Market Update 28/01/2022


Main Headlines

The US economy notched its strongest growth in nearly four decades in 2021 after the government pumped trillions of dollars in COVID-19 relief and is seen forging ahead despite headwinds from the pandemic, strained supply chains as well as inflation. A surge in gross domestic product in the fourth quarter as businesses replenished depleted inventories to meet strong demand for goods was the final push. Last year’s robust growth reported by the Commerce Department on Thursday supports the Federal Reserve’s pivot towards raising interest rates in March. GDP in the US rose 1.7 per cent compared with the previous quarter, based on a measure used by other major economies. And for the full year, the economy grew 5.7 per cent, the biggest increase since 1984, a “very high note” to cap off the year, according to Oxford Economics. Despite disappointing December retail sales data, consumer spending helped support economic growth in the fourth quarter, as Americans did their holiday shopping early amid concerns that supply chain snarls could lead to empty store shelves.

Britain’s cyber security centre has urged UK organisations to check their cyber defences because of concern about the potential for new Russian cyber-attacks linked to tensions with Ukraine. Scores of Ukrainian government computer networks were hit with a cyber-attack last week that included a message, which flashed on Ukrainian computer screens: “be afraid and wait for the worst.” The US and NATO condemned the attack, which Ukrainian officials suspected emanated from Moscow. Paul Chichester, director of operations at the National Cyber Security Centre, urged vigilance and stressed the importance of organisation following the guidance in place to ensure resilience. Analysts said Russian cyber-attacks could be aimed at raising the political costs for the US and NATO allies responding to a potential invasion of Ukraine. UK cabinet office minister, Steve Barclay, warned this week that Britain’s public services risked being shut down by hostile cyber threats. The UK has taken a robust approach to the Russian troop build-up close to Ukraine’s border.

Markets

GBP

Sterling is well bid against most major currencies overnight. Boris Johnson has been accused of taking a reckless approach to public health by lifting all plan B Covid restrictions in England while failing to take enough action to get jabs to 3 billion unvaccinated people in poorer countries. The publication of an official report into Downing Street parties that took place during coronavirus lockdowns is being held up by concerns it could compromise a police investigation. Meanwhile, Boris Johnson faced new calls from his own MPs to postpone a planned £12bn national insurance rise in April, as pressure mounted on him to tack to the right to save his premiership. Staff at dozens of UK universities will start 10 days of strike action next month as a fight over pensions, pay and working conditions continues to cause serious disruption to higher education. Liz Truss has responded after Labour accused the foreign secretary of spending “disgusting amounts of public money” on her own “vanity and comfort” by using the government’s private jet for her trip to Australia.

EUR

Euro is weaker than most major currencies in the early morning trade. France posted its strongest growth in over five decades last year, hitting 7% as the euro zone’s second-biggest economy bounced back from the COVID-19 crisis faster than expected, data showed on Friday. Meanwhile, the head of the Paris hospitals system has set off a fierce debate by questioning whether people who refuse to be vaccinated against COVID-19 should continue to have their treatment covered by public health insurance. Booster shots could reduce future hospitalisations in Europe by at least half a million, the European Union’s public health agency said on Thursday, even as the Omicron variant spreads at an unprecedented pace. The EU’s ambitious sustainable-finance plans, crucial in helping the bloc meet its climate goals, are currently hitting real-world hurdles. Investors, lawmakers, and civil-society activists are lambasting the commission’s proposal, due to be adopted next week, to give some gas and nuclear projects a green label, arguing that it could delay the bloc’s target of net-zero emissions by 2050.

USD

The dollar is stronger against euro and weaker against sterling this morning. Joe Biden has warned Ukraine’s president there is a “distinct possibility” Russia could take military action against the country in February. The Kremlin sounded a similarly grim note, saying it saw “little ground for optimism” in resolving the crisis after the US this week again rejected Russia’s main demands. The White House said the President’s comments to Volodymyr Zelenskyy in a phone call amplified concerns that administration officials have been making for some time. Colorado detected a single case of an omicron sub-variant, which can spread faster. About 1,700 dockworkers at West Coast ports have tested positive for Covid-19 in January, stretching capacity at the US’s busiest gateway for shipping containers. The Department of Health and Human Services has “persistent deficiencies” in its ability to prepare for and respond to public health emergencies. The Government Accountability Office said that well beyond the pandemic, there are various threats that underscore the need for being prepared.

Ballinger & CO. Morning Report- 28th January 2022

Today’s Rates

GBP>EUR – 1.2015

GBP>USD – 1.3380

EUR>USD – 1.1132

GBP>CAD – 1.7101

GBP>AUD – 1.9117

GBP>SEK – 12.637

GBP>AED – 4.9129

GBP>HKD – 10.422

GBP>ZAR – 20.791

GBP>CHF – 1.2458

  Today’s Calendar           

·      7:30 a.m.: France 4Q GDP, Dec. consumer spendind

·      8:00 a.m.: Germany Dec. import price index

·      8:00 a.m: Sweden 4Q GDP, Dec. retail sales, unemployment rate

·      8:45 a.m.: France Dec. PPI

·      9:00 a.m.: Spain 4Q GDP

·      10:00 a.m.: Germany 4Q GDP

·      10:00 a.m.: Italy Jan. manufacturing confidence, consumer confidence

·      10:00 a.m.: Euro area Dec. M3 money supply

·      10:45 a.m.: Macron, Putin call on Ukraine crisis

·      11:00 a.m.: Euro area consumer confidence, economic confidence

·      11:00 a.m.: Italy Dec. PPI

·      12:00 p.m.: U.K. to sell bills

·      1:00 p.m.: South Africa Dec. monthly budget balance

·      2:30 p.m.: U.S. Dec. core deflator, personal income, spending; 4Q employment cost index

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

·      Sovereign rating updates: Hungary and Ireland (Fitch), Finland and Lithuania (Moody’s), Austria and Estonia (DBRS)

  Today’s Highlights

·       Forex Today: Dollar consolidates gains ahead of key US inflation data

·       EUR/USD Forecast: No convincing recovery in sight for euro

·       ECB to hike rates in September 2023, six months after QE halt – Bloomberg Survey

·       Russian Foreign Minister Lavrov: There will be no war with Ukraine

 (https://frank-exchange.com/)



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