“Leal Brainard’s hawkish tone sent stocks down and Treasury Yields up to multi-year highs, as investors are starting to digest the implications of a more aggressive monetary policy tightening – several members of the Federal Open Market Committee, including fed chair Jerome Powell, have advocated larger than 25 basis-point hikes this year.”
Main Headlines
The Federal Reserve will begin a “rapid” reduction of its $9tn balance sheet as soon as its next policy meeting in May and is prepared to take “stronger” action when it comes to raising interest rates in order to bring down inflation, a senior US central bank official has said. Lael Brainard, who is currently awaiting Senate confirmation to become the next vice-chair, said yesterday that the central bank’s “most important task” was to moderate the recent rise in consumer prices, which had disproportionately burdened low and middle-income families. She added that, if warranted by the economic data, the Fed was prepared to take “stronger action” when it came to tightening monetary policy – suggesting tacit support for more aggressive moves, including doubling the pace at which the federal funds rate is raised and delivering half-point rate rises at forthcoming meetings.
Yesterday, Britain urged G7 and NATO nations to ban Russian ships from their ports, agree a timetable to phase out oil and gas imports from Russia, and further tighten sanctions on banks and key industries. In response to the invasion of Ukraine, Britain and international allies have already sanctioned Russian banks and wealthy elites and taken steps to cut Moscow off from the international financial system. Britain’s foreign secretary, Liz Truss, said existing sanctions had frozen $350 billion of Russian money and made over 60% of its foreign currency reserves unavailable. Speaking alongside Polish foreign minister Zbigniew Rau, Truss also said the two countries had agreed to step up sanctions and the supply of weapons to Ukraine. Britain did not immediately provide further details.
Markets
GBP
Sterling is stronger against euro and weaker against the dollar this morning. Shell paid no tax on its oil and gas production in the UK’s North Sea again last year even as a global energy crunch pushed prices for the fuels to record levels. The UK government has ordered a scientific review into fracking just over two years after imposing an effective ban on the controversial technique, as it insisted that “all possible” methods of producing energy domestically should be kept on the table following Russia’s invasion of Ukraine. UK’s Johnson calls on Russians to share reports about “atrocities” committed by their troops in Ukraine, saying if people knew the truth, they would not support the war. England recorded its highest ever COVID-19 infection prevalence in March and cases were still increasing in the over-55s by the end of the month.
EUR
Euro is weaker than most major currencies in the early morning trade. The United States and its allies on Wednesday prepared new sanctions on Moscow over civilian killings, which President Volodymyr Zelenskiy described as “war crimes”, as heavy fighting and Russian airstrikes pounded the besieged port of Mariupol. Hungary’s foreign ministry summoned Ukraine’s ambassador today, over what it called offensive comments from Kyiv regarding Budapest’s stance on Russia’s invasion. President Emmanuel Macron is the clear favourite in France’s presidential race Sunday, yet a big unknown factor may prove decisive: an unprecedented proportion of people say they are unsure who to vote for or don’t intend to vote at all, bringing a large dose of uncertainty to the election.
USD
The dollar is well bid against most major currencies overnight. US president Joe Biden said in a statement, with Australian prime minister Scott Morrison and UK prime minister Boris Johnson, that the allies would enhance co-operation in several areas, including hypersonic weapons, as part of their commitment to “a free and open Indo-Pacific.” Canada’s exports rose 2.8% in February to a record high, driven mostly by energy products, while imports climbed 3.9% from the previous month, data from Statistics Canada showed yesterday, with economists anticipating more gains for exports ahead. The Biden administration will soon start donating children’s doses of Pfizer’s Covid-19 vaccine to poorer countries for the first time, although officials warn some might not reach their intended recipients because of a fight in Congress over pandemic funding.
Ballinger & CO. Morning Report- 06th April 2022
Today’s Rates
GBP>EUR – 1.1998
GBP>USD – 1.3076
EUR>USD – 1.0899
GBP>CAD – 1.6354
GBP>AUD – 1.7259
GBP>SEK – 12.329
GBP>AED – 4.8017
GBP>HKD – 10.251
GBP>ZAR – 19.185
GBP>CHF – 1.2207
Today’s Calendar
· 8:00 a.m.: Germany Feb. factory orders
· 8:00 a.m.: Sweden Feb. industrial orders, household consumption, GDP indicator
· 9:00 a.m.: Riksbank’s Floden speaks
· 9:00 a.m.: ECB’s Guindos speaks
· 9:30 a.m.: Germany March S&P Global construction PMI
· 10:30 a.m.: U.K. March S&P Global/CIPS construction PMI
· 11:00 a.m.: Euro area Feb. PPI
· 12:00 p.m.: EU to sell bills
· 12:45 p.m.: ECB’s Lane Speaks
· 4:30 p.m.: EIA weekly report on U.S. oil inventories
· 6:00 p.m.: Russia weekly CPI
· Poland base rate announcement
· Oil executives testify on gasoline prices
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.