Morning Report

January 26, 2023

“The US dollar came close to an eight-month low against major peers this morning, whilst gloomy US corporate earnings stirred further fears of a recession. Investor’s focus is set on next week’s central bank meetings as the Federal Reserve, the Bank of England and the European central bank will decide on their rate-hike paths.”

Tim Hallinan – Trading Director

Main Headlines

The pace of US economic growth is set to have slowed in the final quarter of 2022, as the Federal Reserve’s aggressive campaign to raise borrowing costs weighed more heavily on consumer spending and business activity. The world’s largest economy is forecast to have expanded 2.6 per cent on an annualised basis between September and December. That would mark a slowdown from the 3.2 per cent increase registered in the third quarter but still a solid clip given the steps the US central bank has taken so far to damp demand.

British car manufacturing fell to the lowest level in more than half a century during 2022, after a year tainted by supply chain disruption and a spate of factory closures. The number of cars produced fell 9.8 per cent to 775,014, the worst year since 1956, according to figures released by the Society of Motor Manufacturers and Traders on Thursday. While the worldwide industry is still hamstrung by a global semiconductor shortage and sporadic parts supplies from China, several UK plant closures during the past two years depressed the numbers further.


Sterling is well bid against most major currencies this morning. UK’s Royal Mail forecast a narrower loss for the current fiscal year, helped by measures to keep costs low, although its expects cash flow to slip into negative for 2024 as it reels from the impact of a series of strikes. The 507-year-old Royal Mail, which was privatised in 2013, is in the middle of a crisis after losing millions of pounds due to staff strikes in a long-running row over pay and conditions. Britain faces a severe shortage of doctors who work both in the NHS and at universities, which threatens medical research and teaching.


Euro is stronger against the dollar and weaker against sterling this morning. EY Germany is planning to cut 40 partners and shed 380 staff as the Big Four firm attempts to improve profitability after the damage caused by the Wirecard scandal. Russian warplanes launched a wave of missiles at Ukraine this morning and Ukrainians took cover in shelters as air defence forces shot down incoming salvos. European Union migration ministers meet today to discuss  better coordination inside the bloc to be able to send more people with no right to asylum in Europe back to their home countries.


The dollar is weaker than most major currencies in the early morning trade. Joe Biden’s multibillion-dollar Inflation Reduction Act has delivered a big green bonus for climate experts and US business while infuriating America’s trading partners. The bill earmarked $369bn for clean energy and climate-related projects, provoking a litany of complaints from EU governments who claim it violates trade rules and distorts competition. Joe Biden has approved sending 31 M1 Abrams tanks to Ukraine, a significant escalation in the US effort to counter Russian aggression.


European stocks rose with US equity futures rose amid a positive tone for risk taking as companies delivering positive earnings surprises assuaged recent disappointments. The Stoxx Europe 600 Index bounced more than 0.5% at the start of trading alongside gains of a similar magnitude in the Nasdaq 100. Tesla Inc.’s earnings report after the close of trading helped relieve some of the sting of Microsoft Corp.’s dire sales warning earlier in the week.

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

9:00 a.m.: Spain 4Q Unemployment
10:00 a.m.: Italy Jan. Consumer, Manufacturing Confidence
1:00 p.m.: Ukraine rate decision
2:30 p.m.: US Jobless Claims, Dec. Durable Goods; 4Q GDP, Core PCE
4:00 p.m.: US Dec. New Home Sales

Corporate Events

Earnings include Visa, Mastercard, LVMH, Intel, Comcast, Blackstone, Marsh & McLennan, McCormick, Diageo, SAP, STMicro, Volvo, T. Rowe Price, American Airlines, Southwest Airlines, Wizz Air, Atlas Copco


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