Morning Report

December 22, 2021

“As volatility starts to fade in the weeks either side of Christmas, the pound dropped slightly, and the euro and dollar edged a little higher as a rally in riskier asset classes began to lose steam.”

Sam Cornford, Partner and Head of Trading

Main Headlines

Yesterday, President Biden blamed the rapid spread of the Omicron variant in the US on a shortage of Covid-19 testing kits. Following this, he outlined how his administration would buy 500 million rapid test kits to send to households for free from January. While suggesting Americans ‘have to do better’ to fight the virus, he also dismissed claims his administration had been too slow distribute test kits more widely. His response follows the news earlier in the week that Omicron now accounts for 73 percent of Covid cases in the US. He also announced that they were set to deploy 1,000 military doctors and nurses to overburdened hospitals in January and February and that six emergency response teams were being sent to six key states.

As the rapid spread of the Omicron variant continues to impact the UK, Rishi Sunak announced a new package for companies affected by Omicron. The chancellor of the exchequer has unveiled a new £1bn fund yesterday. The fund will allow hospitality businesses to apply for grants of up to £6,000 per site and sets aside an extra £30m to help theatres and museums. However, the hospitality sector warned this was not enough to deal with the impacts of the rapidly spreading variant. UK Hospitality estimates that in total, hospitality businesses have lost £4bn in sales since the government began implementing Plan B measures last month. Furthermore, in several businesses in central London, sales are down to a fifth of what they were in two years ago.


Sterling is weaker against the dollar and higher than the euro in early morning trade. Following her first conversation with Maros Sefcovic, the British foreign secretary said yesterday she wats to ‘urgently resolve’ the Northern Ireland protocol dispute to enable both the UK and the EU to shift their focus to global challenges. Liz Truss stated she was determined to ‘unleash the potential’ of the relationship between the sides, which has been dominated by feuding in recent times. Meanwhile, yesterday Boris Johnson ruled out introducing further Covid restrictions in England before Christmas. While he stated he was ‘ready to take action’ if the situation changed, he did not believe there was enough evidence to justify further restrictions before Christmas.


The euro is weaker than most major currencies overnight. The Russian President warned he would consider a military response to the threat of Nato’s expansion towards Russia’s borders. In a speech yesterday, Putin told a group of senior military officers that Russia would ‘react harshly,’ in a move which signals he is not prepared to de-escalate the tension between the sides. Elsewhere, the energy crunch in Europe worsened, as European gas prices have surged to new record highs after flows from a key Russian pipeline stopped. Yesterday, gas for delivery in Europe jumped more than 20 percent to €181 per megawatt hour. This price jump threatens to drive household energy bills across the continent and increase inflationary pressures.


The dollar is well big against most major currencies this morning. President Biden expressed optimism Tuesday that he could find a pathway to an agreement with Sen. Joe Manchin after the West Virginia Democrat rejected Democrats’ roughly $2 trillion education, healthcare and climate proposal. A jury on Tuesday found Harvard professor Charles Lieber guilty on six counts related to payments he received from a Chinese government talent program to share scientific developments and research secrets. Elsewhere, US regulators are insisting there should be greater disclosure from Chinese companies listed in the US. The guidance was released by the Securities and Exchange Commission and follows the new rules from Beijing which took billions of dollars from Chinese education companies and encouraged Didi, a ride-hailing group to delist from US exchanges.


A global rebound in stocks moderated in Asia on Wednesday amid uncertainty over the omicron virus strain’s economic impact and a foggy outlook for U.S. fiscal stimulus. U.S. futures turned lower and European contracts made modest gains. The S&P 500 and the tech-heavy Nasdaq 100 jumped on Tuesday as risk appetite revived somewhat. Equities in Japan and China were steady, while Hong Kong pared gains as a rally in technology shares fizzled. While crude oil and Treasury yields were steady, a dollar gauge advanced. A strong 20-year auction underscored ongoing demand for U.S. government bonds amid a savings glut and range of economic risks.

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

8:00 a.m.: U.K. 3Q GDP, imports, exports

8:00 a.m.: U.K. government spending, private consumption, business investment

8:30 a.m.: Norges Bank 2022 borrowing plan

8:45 a.m.: France Nov. PPI

9:00 a.m.: Spain Nov. PPI

9:30 p.m.: Sweden Nov. PPI, retail sales

10:00 a.m.: ECB’s Holzmann speaks in Vienna

10:00 a.m.: Genscape Europe ARA crude inventory report

2:30 p.m.: Czech Republic repurchase rate

4:30 p.m.: EIA U.S. oil inventories

5:00 p.m.: Russia Nov. industrial production, PPI

EU to announce green investment rules for nuclear, gas projects

Corporate Events

Earnings include Paychex, Cintas, CarMax


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