February 8, 2023

“The dollar fell in the early morning trade after Federal Reserve Chair Jerome Powell indicated that the disinflationary process had started, but the robust employment numbers seen last week could lead to further rate hikes. Meanwhile, the yen made a recovery in yesterday’s trade, gaining 1.2% on the euro and 1.4% on the dollar.”

Tim Hallinan – Trading Director

Main Headlines

Texas has filed a lawsuit against the Biden administration to stop it from requiring pharmacies to fill prescriptions for reproductive health. In July 2022, the Biden administration stated that failing to fill prescriptions for drugs that could be used for abortion could break federal law, regardless of any state laws prohibiting the procedure. The lawsuit was filed yesterday against the US Department of Health and Human Services in the Western District Court of Texas.

MPs have warned that a restructuring of Britain’s National Health Service (NHS), designed to improve collaboration between healthcare providers and local governments, may not succeed unless longstanding issues within the service are addressed. Parliament’s public accounts committee, responsible for scrutinizing public spending, has expressed concerns over the lack of oversight in the new arrangements and doubts about the tangible benefits for patients.

GBP

Sterling is well bid against most major currencies this morning. British banks have received over £4.4 billion in taxpayers’ funds to compensate for defaults and fraud on the £77 billion in government-backed loans to businesses affected by the COVID-19 lockdowns. Despite warnings, Rishi Sunak is working to revitalize the government’s growth plan by reorganizing the business department. The UK’s labour market showed further indications of slowing down, with the starting pay for permanent employees growing at its slowest rate in nearly two years.

EUR

Euro is stronger against the dollar and weaker against sterling this morning. The death toll from earthquakes in Turkey and Syria has risen to over 8,000, with tens of thousands more injured, as rescue efforts continue following one of the region’s worst disasters in recent history. The energy sector in Europe is approaching a turning point in carbon dioxide emissions as renewable energy and cleaner sources of electricity generation are set to meet almost all of the world’s new electricity demand in the next three years.

USD

The dollar is weaker than most major currencies in the early morning trade. Jay Powell has warned that the US Federal Reserve may have to increase interest rates more than expected due to the “significant period of time” it will take to control inflation, given the strong labour market data. President Biden has warned that the US will defend itself if China poses a threat to its sovereignty and used a speech to Congress to convey a resolute message to Beijing and defend his economic record in the White House.

Markets

European stocks gained, buoyed by positive earnings, following a late rally in US shares in a volatile session after Federal Reserve Chair Jerome Powell passed up an opportunity to tamp down investor optimism. The Stoxx Europe 600 index climbed about 0.6. ABN Amro Bank NV led banking stocks higher after announcing a share buyback. benchmark traded around 1% higher. US futures slipped after the S&P 500 advanced more than 1% Tuesday. The tech-heavy Nasdaq 100 outperformed major benchmarks, climbing more than 2%.

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

8:00 a.m.: Sweden Dec. Industrial Orders
8:30 a.m.: Hungary Dec. Trade Balance
10:00 a.m.: Italy Dec. Retail Sales
10:00 a.m.: ECB’s Enria, Elderson speak on supervision
3:15 p.m.: Fed’s Williams interviewed at WSJ event
4:00 p.m.: ECB’s Knot speaks
5:00 p.m.: Russia weekly CPI, Dec. Unemployment
Poland base rate
ECB Supervisory Board press conference

Corporate Events

Earnings include Uber, Disney, TotalEnergies, CVS Health, Equinor, Eaton Corp, CME Group, Brookfield Asset, Emerson Electric, O’Reilly Automotive, Maersk

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