“US PPI is expected to rise 7.2% year on year in November when released later today, slowing from 8% last month. Meanwhile, stocks around the world rose this morning driven by expectations that China’s economy would strengthen as COVID-19 curbs are easing.”
Main Headlines
The US House of Representatives has passed a sweeping $858bn defence spending bill that provides $10bn to fund the provision of weapons to Taiwan as the country comes under increasing pressure from China. The National Defense Authorization Act, which is expected to pass the Senate later this month, provides five years of funding for weapons. It marks the first time the US government will finance weapons for Taiwan, which in the past has bought arms from US companies after Washington has provided approval for the sales.
Andrew Griffith has pledged that the “Edinburgh” package of post-Brexit reforms for the financial services industry will make the sector “as internationally competitive as possible.” Chancellor Jeremy Hunt will launch wide-ranging consultations on rules for financial services in order to discard EU standards and make the City more competitive against global rivals. The reforms range from loosening insurance rules under the Solvency II regime, freeing some retail banks from ringfencing their operations.
Markets
US equity futures rose Friday before a report on US producer prices that will be one of the final pieces of data to inform a rate decision by the Federal Reserve next week. The dollar fell. Contracts on the S&P 500 added 0.2% after the underlying benchmark notched its first advance this month. A European equity benchmark traded flat, paring its weekly loss to 1.7%. Asian equities headed for their sixth weekly gain, the longest such stretch in two years. Treasury yields were little changed, with the 10-year rate hovering near 3.45%.
GBP
Sterling is stronger against the dollar and weaker against euro this morning. The UK set out a package of measures to boost financial services, which will repeal EU regulations covering areas like disclosure for financial products and prudential rules for banks and also overhaul EU rules that put companies off listing in the UK. The government will free retail-focused banks from ring-fencing rules and issue new mandates to regulators, the FCA and PRA. UK ministers blocked a possible deal to call off this month’s rail strikes by preventing the industry from offering unions higher pay deals and adding tough new conditions at the last minute.
EUR
Euro is well bid against most major currencies overnight. The ECB will tighten policy by 50 bps next week and again in February to take the deposit rate to a peak of 2.5%. Spain and France are dropping plans to transport natural gas via an undersea pipeline between the two countries and will instead dedicate it only to hydrogen in a bid to secure the “maximum” possible EU funding for the project. Finland’s defence minister said the sooner Turkey ratifies its NATO membership bid the better and it would consider granting arms export permits to Turkey on a case-by-case basis.
USD
The dollar is weaker than most major currencies in the early morning trade. Canada’s TC Energy shut its Keystone pipeline in the United States after more than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest crude spills in the United States in nearly a decade. The FTC sued to block Microsoft’s $69 billion acquisition of Activision Blizzard. The commission voted 3-1 in favour of the complaint. Regulators said a tie-up would hurt others in the $200 billion gaming market by limiting their access to the company’s biggest games. The deal would turn Microsoft into the No. 3 gaming company, behind Tencent Holdings and Sony.
Ballinger & Co. Market Analysis– 09th December 2022
Today’s Market Rates
Today’s Interbank Rates at 10:08 am against sterling movement.
GBP>EUR – 1.1595
GBP>USD – 1.2257
EUR>USD – 1.0564
GBP>CAD – 1.6708
GBP>AUD – 1.8113
GBP>SEK – 12.647
GBP>AED – 4.5005
GBP>HKD – 9.544
GBP>ZAR – 21.111
GBP>CHF – 1.1434
Today’s Highlights
· 8:00 a.m.: Norway Nov. CPI, PPI
· 8:30 a.m.: Riksbank’s Jansson speech published
· 9:00 a.m.: Austria Oct. Industrial Production
· 10:30 a.m.: BOE’s inflation attitudes survey
· 11:00 p.m.: Greece Nov. CPI
· 2:00 p.m.: Ukraine Nov. CPI
· 2:30 p.m.: US Nov. PPI
· 4:00 p.m.: US Dec. University of Michigan Sentiment, Oct. Wholesale Inventories
· 5:00 p.m.: Russia Nov. CPI
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.
