January 23, 2023

“EURUSD is trending upwards as the euro maintains its advantage this morning, supported by Hawkish ECB remarks and a general decline in the value of the US dollar. Later this week, PMI data in the US, Eurozone and UK for January, as well as US Q4 GDP are due. Additionally, comments from ECB’s Lagarde later today will be closely watched.”

Tim Hallinan – Trading Director

 

Main Headlines

A new search of President Joe Biden’s home in Wilmington, Delaware by the US justice department found six more items, including documents with classification markings, a lawyer for the president said in a statement Saturday night. Some of the classified documents and “surrounding materials” dated from Biden’s tenure in the Senate, where he represented Delaware from 1973 to 2009, according to his lawyer, Bob Bauer. Other documents were from his tenure as vice-president in the Obama administration, from 2009 through 2017, Bauer said. The justice department, which conducted a search on Friday that lasted more than 12 hours, also took some notes that Biden had personally handwritten as vice-president, according to the lawyer.

Jeremy Hunt has been urged to release new money to end the wave of strikes disrupting NHS services or risk the dispute dragging on for months. The public sector union Unison made the demand to the chancellor as the health service in England prepared to contend with the latest in a series of stoppages by ambulance staff today. Whitehall, NHS and health unions sources say Hunt is refusing to give the health secretary, Steve Barclay, any extra money to increase the £1,400 pay uplift he has imposed on staff for 2022/23 and told Barclay to fund any higher offer from the existing health budget.

 

GBP

Sterling is stronger against the dollar and weaker against euro this morning. Rishi Sunak will be accused by a senior business leader later today of adding legislative “chaos” to the faltering UK economy, amid increasing signs that corporate Britain is disenchanted with government policy. Tony Danker, head of the CBI employers’ group, will claim in a hard-hitting speech that the prime minister’s plan to scrap hundreds of laws of EU origin at the end of the year is creating “huge uncertainty for UK firms”. Danker’s speech will reflect rising unease among British companies about the expected recession this year, and the damage caused by Brexit.

 

EUR

Euro is well bid against most major currencies overnight. The eurozone will avoid a recession this year according to a widely-watched survey of economists which illustrates the sharp about-turn in global economic sentiment in the past couple of weeks. As recently as last month, analysts surveyed by Consensus Economics were predicting the bloc would plunge into recession this year. But this month’s survey found that they now expect it to log growth of 0.1 per cent over the course of 2023. This is thanks to lower energy prices, bumper government support and the earlier-than-anticipated reopening of the Chinese economy, which is set to boost global demand.

 

USD

The dollar is weaker than most major currencies in the early morning trade. A bipartisan group of US lawmakers is preparing a plan to defuse a looming crisis over the nation’s debt ceiling by changing it from a fixed dollar amount a percentage of national economic output, the group’s top Republican said yesterday. The proposal would replace Washington’s current federal debt ceiling, currently set at $31.4 trillion, with a rule that would instead limit debt to a share of national economic output, said US Representative Brian Fitzpatrick, the Republican co-chair of the moderate Problem Solvers Caucus.

 

Markets

European markets started the new trading week on an uncertain note this morning with investors reassessing the economic outlook. The pan-European Stoxx 600 was up 0.15% in early trade, with tech stocks adding 1.1% while chemicals slid 0.7%. Global markets have been weighing the possibility that the Federal Reserve is getting ready to slow the pace of its inflation-fighting rate hikes after economic data last week showed a decline in wholesale prices and retail sales. US stock futures were little changed yesterday evening while shares were higher in Asia overnight, but most markets in the region are closed for the Lunar New Year holiday, with markets in Shanghai shut for the whole week.

 

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

10:00 a.m.: Poland Dec. PPI, Industrial Output, Retail Sales
2:30 p.m.: ECB’s Visco speaks
3:30 p.m.: ECB’s Panetta speaks
4:00 p.m.: Euro-Area Jan. Consumer Confidence
4:00 p.m.: US Dec. Leading Index
5:00 p.m.: ECB’s Holzmann speaks
6:45 p.m.: ECB’s Lagarde speaks

 

Corporate Events

Earnings include Baker Hughes and Synchrony Financial

 

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