Morning Report

April 27, 2023

“This morning, the euro maintained its position near its one-year high against the dollar. Despite worries about the risk of banking contagion in the United States, Europe’s economic strength has helped buoy the currency. Recent data indicates that the US economic growth rate in the first quarter of this year is likely to have decreased to an annualized rate of 2%.”

Tim Hallinan – Trading Director

Main Headlines

In the first quarter of 2023, the US economy is expected to have grown by 2% on an annualized basis, which is a slight deceleration from the 2.6% pace in the previous quarter. Despite the momentum ebbing, the economy is expected to exhibit pockets of strength, with economists anticipating strong consumption growth offsetting the drag from net exports and inventories. The Federal Reserve’s historic monetary tightening campaign is believed to have contributed to this growth.

Microsoft’s proposed acquisition of Activision Blizzard worth $75 billion has been blocked by the UK competition regulator. Activision expressed its anger at the decision, claiming that Britain is “clearly closed for business.” The Competition and Markets Authority ruled on Wednesday that Microsoft could use its own cloud gaming service to exclusively feature Activision’s games, which could have had a detrimental effect on competition. Activision argued that the decision goes against the UK’s ambitions to become an attractive country for building technology businesses, and it will do a disservice to UK citizens who are facing an increasingly challenging economic future.


Sterling is stronger against the dollar and weaker against euro this morning. The UK government has successfully passed divisive legislation in the House of Commons aimed at deterring asylum seekers from crossing the Channel into the UK. Meanwhile, minor illnesses were the primary reason for sickness absence in the UK, although Covid-19 remained a significant factor. Additionally, a significant proportion of 35 to 44-year-olds have had to borrow to make ends meet in the cost-of-living crisis, more so than those aged over 55.


Euro is well bid against most major currencies this morning. The Swiss National Bank recorded a profit of 26.9 billion Swiss francs in the first quarter of 2023, attributed to the increase in value of its gold and foreign currency investments. Deutsche Bank’s first-quarter profit rose by 9% due to increased income from higher interest rates, although revenues at the investment bank have slumped. Brussels has published a draft proposal for the overhaul of laws governing the EU’s pharmaceuticals industry, causing concern among drugmakers who warn of reduced investment and innovation.


The dollar is weaker than most major currencies in the early morning trade. Moody’s has reported that distressed US companies are increasingly turning to debt restructuring to avoid expensive bankruptcy proceedings, but many borrowers still end up in court. Almost three-quarters of US corporate debt defaults last year were out-of-court “distressed exchanges,” which involve companies offering assets worth less than their original bonds or loans, up from roughly half in 2020. The House of Representatives has approved a Republican plan to raise the debt ceiling in a legislative victory for Speaker of the House Kevin McCarthy, although it is unlikely to break the stalemate with the White House.


Stocks in Europe drifted while US equity futures gained amid mixed corporate earnings reports. The Stoxx 600 Index slipped 0.1%, set for its longest streak of daily declines since Dec. 8. Deutsche Bank AG dropped after trading revenue disappointed while Barclays Plc shares rose after posting a 9% gain in fixed-income trading revenue.

Main Economic Data/Central Banks/Government (All Times CET)

9:00 a.m.: Spain 1Q Unemployment
10:00 a.m.: Italy April Manufacturing and Consumer Confidence
10:00 a.m.: Norges Bank 1Q Survey of Bank Lending
11:00 a.m.: Euro-Area April Economic Confidence
1:00 p.m.: Turkey Rate Decision
2:30 p.m.: US 1Q GDP, Personal Consumption, Core PCE
4:00 p.m.: US March Pending Home Sales
6:15 p.m.: ECB’s Panetta speaks

Corporate Events

Earnings include Amazon, AbbVie, Caterpillar, Comcast, Eli Lilly, Hasbro, Intel, T-Mobile, Southwest Airlines, Seagen, Mastercard, Roper Technologies, Mondelez, Merck & Co., Intel


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