Daily Market Update 10/02/2022


Main Headlines

US officials have warned that Russia has continued to ramp up its military activity around the Ukrainian border, despite a flurry of diplomatic efforts to defuse the crisis including a high-profile visit to Moscow this week by French president Emmanuel Macron. The White House and the Pentagon previously said Moscow was increasing its military presence near Ukraine, even though Macron earlier this week said the Russian president had assured him there would be no “deterioration or escalation” in the stand-off. Biden met Olaf Scholz, the German chancellor, on Monday in a bid to portray unity between Washington and Berlin and warn Moscow that it would face severe economic sanctions if it went ahead with an invasion of Ukraine. US and European NATO members remained adamant that a diplomatic solution to the stand-off was still their preferred option and that the path to an agreement with Moscow was still open. There are concerns in Washington that a combination of the threat of sanctions, troop deployments to eastern European allies, aid to Ukraine and diplomatic exchanges with Russia have failed to yield concrete results.

The European Commission has launched the first post-Brexit court case against the UK in a move that could exacerbate tensions between Brussels and London. The commission on Wednesday referred the British government to the European Court of Justice, claiming a February 2020 UK Supreme Court judgment ordering the Romanian government to pay compensation to investors who lost out on state subsidies “breached the principle of sincere co-operation” and violated EU law. The referral comes as London and Brussels are locked in talks over possible changes to the Northern Ireland protocol, which governs post-Brexit trade on the island of Ireland. Boris Johnson, the UK prime minister, threatened again on Wednesday to trigger Article 16 of the protocol which would suspend some checks on goods between Great Britain and Northern Ireland. The commission had started infringement proceedings over the UK’s failure to fully comply with the protocol but paused them during the negotiations. Under the EU withdrawal agreement, the UK is subject to the ECJ and its rulings for four years after the transition period that ended on December 31, 2020.

Markets

GBP

Sterling is stronger against the dollar and weaker against euro this morning. The UK tax authority is facing “new and challenging risks” policing changes to the rules governing payment of contractors in the private sector. The head of the Unite union has threatened to withdraw funding for Labour over a pay dispute involving bin lorry drivers in Coventry. Union members in the city started a two-month strike at the end of January, saying drivers deserve better pay. Unite, Labour’s single biggest donor, said financial support for the party was now “under review.” Meanwhile, more than 50 people to face police questions on Downing Street parties. In a sign of the scale of the “party gate” criminal inquiry, the Metropolitan police revealed on Wednesday they would this week start contacting more than 50 people as part of “Operation Hillman”, an investigation into events on eight dates between May 2020 to April 2021. The UK government published a plan to ensure more seamless working between the NHS and social care sector in England as it seeks to demonstrate value for money from the record sums it is ploughing into the service. Figures from the Health Foundation show the NHS is short about 100,000 staff. Of these, about 40,000 are nurses.

EUR

Euro is well bid against most major currencies overnight. The Russian and Belarusian armies started ten-day manoeuvres in Belarus today, the Russian Ministry of Defence announced. Meanwhile, Ukraine begins previously announced military exercises in response Russian drills in neighbouring Belarus, which Kyiv and the West have interpreted as part of Russia’s military escalation in the region. Norway’s largest bank DNB reported a 17% rise in fourth-quarter earnings on Thursday and said the reopening of society from coronavirus lockdowns has been a boost to Norwegian businesses. DNB’s net profit rose to 6.16 billion Norwegian crowns for October-December from 5.27 billion crowns a year ago, in line with an average forecast of 6.15 billion crowns in a poll of analysts compiled by the firm. The European Commission plans to withhold EU funds from Poland over an unpaid fine related to a coalmine dispute. In an unprecedented move, the commission will cut Poland’s EU funds by €15m to recover money Warsaw has refused to pay the European court of justice. Surging European gas prices and high demand for electricity in the cold winter months have granted a reprieve to a coal plant in northwest Spain, but its workers’ future is unclear.

USD

The dollar is weaker than most major currencies in the early morning trade. Federal Reserve Bank of Cleveland President Loretta Mester and her Atlanta counterpart Raphael Bostic said all options are on the table for the size of policy makers’ first interest-rate increase in March, but Mester doesn’t see a “compelling case” for a 50-basis-point hike. The Atlanta Fed chief said incoming data will show whether 25- or 50-basis-point increases are appropriate. Nancy Pelosi, speaker of the US House of Representatives, has tasked Democratic allies with drafting proposals to ban members of Congress from buying and selling stocks. The Federal Reserve’s more inclusive approach to stewarding the US economy is undergoing a test as inflation rips through household budgets. Central bank chair Jay Powell said the US labour market conditions were “consistent with maximum employment” when the Fed signalled it would start to raise interest rates in March. President Joe Biden expressed similar sentiments after a strong US jobs report on Friday, declaring that “America is back to work.” Kamala Harris will hold a series of in-person meetings with US allies and partners at the Munich Security Conference next week seeking to deter Russian aggression in Ukraine.

Ballinger & CO. Morning Report- 10th February 2022

 

Today’s Rates

GBP>EUR – 1.1852

GBP>USD – 1.3562

EUR>USD – 1.1441

GBP>CAD – 1.7183

GBP>AUD – 1.8865

GBP>SEK – 12.400

GBP>AED – 4.9801

GBP>HKD – 10.567

GBP>ZAR – 20.537

GBP>CHF – 1.2525

  Today’s Calendar           

·      8:00 a.m.: Norway Jan. CPI

·      8:00 a.m.: Denmark Jan. CPI

·      9:30 a.m.: Riksbank interest rate

·      9:30 a.m.: Hungary central bank one-week deposit rate

·      11:00 a.m.: European Commission’s economic forecasts

·      11:00 a.m.: Italy sells bills

·      12:00 p.m.: Portugal Jan. CPI

·      1:00 p.m.: ECB’s Guindos speaks

·      1:30 p.m.: ECB’s Villeroy speaks

·      2:15 p.m.: ECB’s Lane speaks

·      2:30 p.m.: US Jan. CPI, weekly jobless claims

·      6:00 p.m.: BOE’s Bailey speaks

·      OPEC monthly oil market report

  Corporate Events

·       Earnings include AstraZeneca, TotalEnergies, Linde, Unilever, Pernod Ricard, Coca-Cola, Pepsico, Philip Morris, Brookfield Asset Management, Duke Energy, Moody’s, Illumina, Datadog, Global Payments, Dexcom, Republic Services, Cloudflare, Expedia, Twitter, Zebra, PG&E, Verisign, Martin Marietta, Hubspot, FirstEnergy, Kellogg, SS&C, Confluent, Equitable, Fairfax, Zillow, Tapestry, Mohawk, Saputo, Western Union

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