Morning Report

February 7, 2023

“The greenback remains relatively strong this morning, supported by a softer tone to risk appetite, while the Australian dollar has outperformed other currencies following the policy updates from the Reserve Bank of Australia. As anticipated, the RBA increased its main interest rate by 25 bps to 3.35%. Later today, remarks by Federal Reserve Chairman Jerome Powell and European Central Bank Board member Isabel Schnabel will be closely watched.”

Sam Cornford, Partner – Head of Trading


Main Headlines

Goldman Sachs revised their outlook yesterday, estimating a 25% chance of a US recession in the next year, down from their prior forecast of 35%. This adjustment came after the latest US employment report was released on Friday, indicating a substantial increase in job growth in January and an unemployment rate that reached a new low of 3.4% -the lowest in over 53 years – highlighting a robust and competitive job market.

EU and UK negotiators have come to a compromise to minimize inspections on goods flowing between Great Britain and Northern Ireland, as part of their efforts to resolve the prolonged conflict surrounding the Northern Irish protocol. Under the new agreement, goods from Great Britain headed for Northern Ireland will be subject to reduced checks through a designated “green lane,” but the specific requirements for customs documentation and food and animal health inspections have yet to be determined.



Sterling is well bid against most major currencies overnight. A top official at the Bank of England has cautioned that the central bank may be required to continue raising interest rates in order to avoid inflation from becoming a persistent issue in the economy. Catherine Mann, an independent economist at the bank’s Monetary Policy Committee (MPC), said inflation remained higher than expected due to the impact of the coronavirus pandemic, Russia’s war in Ukraine and Brexit.



Euro is weaker than most major currencies in the early morning trade. This morning, a nationwide strike against planned pension reforms disrupted petrol deliveries from French refineries. Since mid-January, unions have been on strike to protest the government’s plans to make people work longer before retiring. Schools and public transportation have also been impacted. According to data from power utility EDF (EDF.PA), total power supply was reduced by about 4%, due to reduced supply at two nuclear reactors and several thermal plants.


The dollar is stronger against euro and weaker against sterling this morning. The main US stock indexes fell yesterday as investors shifted gears after considering the possibility that the US Federal Reserve may take longer to start cutting rates. Traders are keeping a close eye on speeches by Fed officials this week, including Chair Jerome Powell today, for any change in the central bank’s dovish rhetoric after data last week showed services activity was strong in January as well as strong job growth.



European markets moved higher this morning, however,  global sentiment remains mixed. The pan-European Stoxx 600 was up 0.3% in early trade, with sectors and major bourses a mixture of gains and losses. Oil and gas led gains, up 1.6%, while tech stocks dropped 0.4%. US stock futures rose slightly early this morning as investors braced themselves for the latest commentary due today from Federal Reserve Chairman Jerome Powell.


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

7:45 a.m.: Switzerland Jan. Unemployment
8:00 a.m.: Germany Dec. Industrial Production
8:00 a.m.: Norway Dec. Industrial Production
8:00 a.m.: Sweden Jan. Budget Balance
8:45 a.m.: France Dec. Trade Balance
9:00 a.m.: Spain Dec. Industrial Production
9:00 a.m.: Switzerland Jan. Foreign Currency Reserves
9:00 a.m.: ECB’s Kazimir speaks
9:10 a.m.: ECB’s Knot speaks
10:00 a.m.: BOE’s Ramsden speaks
11:00 a.m.: UK to sell bonds
11:00 a.m.: ECB’s Villeroy speaks
11:15 a.m.: BOE’s Pill speaks
4:00 p.m.: BOE’s Cunliffe speaks
6:00 p.m.: ECB’s Schnabel speaks
Fed’s Powell speaks
Biden delivers State of the Union address
Ukraine Jan. Official Reserve Assets
Bank of Italy Reports on Balance-Sheet Aggregates


Corporate Events

Earnings include KKR, Aramark, Carlyle, DuPont, Linde, Graphic Packaging, Adient, Xylem, Hertz


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