January 12, 2023

“Today, the focus will be on the release of the US CPI inflation data for December, which is largely expected to bolster the case for the Federal Reserve to keep moderating the pace of interest rate hikes. Meanwhile, the euro briefly hit a seven-month high against the dollar as traders are hesitant to make big moves ahead the data release.”

Tim Hallinan – Trading Director

Main Headlines

Airlines have cancelled tens of thousands of US flights this winter, and imposed even more delays, resulting in the worst chaos in more than a decade and straining a country dependent on planes for long-distance trips. The latest disruptions came today when a computer glitch at the US Federal Aviation Administration grounded planes across the nation for two hours. More than 10,000 flights were cancelled or delayed. This followed widespread problems triggered by a winter storm at Christmas. Several US carriers suffered delays while Southwest Airlines, a low-cost carrier, left some travellers stranded for days.

The UK government must urgently streamline post-Brexit visa bureaucracy for overseas general practitioners seeking to work in the UK, to help address a chronic shortage of doctors, medical leaders have warned. Since Brexit ended free movement of labour with the EU, the UK has relied on more non-EU foreign doctors. As a result, 48 per cent of all current trainee GPs require visas, according to data from the British Medical Association. Under current rules, individual GP practices must pay a fee of up to £1,500 to become a licensed sponsor of skilled migrant workers needing visas.

GBP

Sterling is well bid against most major currencies this morning. More than three quarters of a million UK households are at risk of defaulting on their mortgage payments in the next two years, the country’s top financial regulator has warned. The UK foreign secretary said London and Brussels still have “genuine differences” over post-Brexit trading arrangements for Northern Ireland, despite the first tangible signs of progress in ending a bitter deadlock. UK prime minister Rishi Sunak and his French counterpart, president Emmanuel Macron, will in March attend a UK-France summit, the first of its kind in five years.

EUR

Euro is stronger against the dollar and weaker against sterling this morning. President Emmanuel Macron’s plans to raise the retirement age by two years may deliver meagre economic and financial gains over time but come at the cost of infuriating unions and aggravating workers already stung by the inflation crisis. Moscow named a new commander for its invasion of Ukraine while Russian private military firm Wagner Group said its capture of the salt mining town Soledar in eastern Ukraine was complete, though the Ukrainian military said the battle was not over.

USD

The dollar is weaker than most major currencies in the early morning trade. The annual US inflation rate is set to have fallen in December to its slowest pace in more than a year, in a further sign that price pressures have peaked amid the Federal Reserve’s historic tightening campaign. The US and Japan have announced they are extending their security alliance to space in a push to defend against attacks on satellites amid growing concern about the threat from China. South Korean firm, Hanwha, will take advantage of new federal tax credits to create initial US production capacity for silicon ingots, and solar wafers and cells.

Markets

Stocks in Europe and Asia gained as traders wagered that US inflation is cooling, reducing pressure for aggressive rate hikes from the Federal Reserve. The benchmark European stocks gauge was pushed higher by mining and energy companies amid optimism over demand from China as its economy reopens. On Wall Street, Nasdaq 100 contracts were steady after the technology sector, one of the most-beaten down groups during the Fed’s tightening campaign, led gains among US shares on Wednesday. Those for the S&P 500 were little changed.

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

8:00 a.m.: Norway Nov. GDP
10:00 a.m.: ECB publishes economic bulletin; consumer expectations survey
11:00 a.m.: Greece Dec. CPI
2:30 p.m.: US Dec. CPI, weekly jobless claims
6:00 p.m.: BOE’s Catherine Mann speaks
USDA releases monthly world agricultural supply/demand estimates

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