Morning Report

January 6, 2023

“The US dollar outperformed its rivals yesterday, supported by the upbeat US employment data. US private sector employment rose by 235,000 in December, surpassing the market expectation by a wide margin. Early this morning, the greenback regained upward momentum amid a cautious market mood. Later today, Eurozone inflation figures and US jobs report for December are due.”

Sam Cornford, Partner – Head of Trading


Main Headlines

US President Joe Biden has announced a new plan to accept up to 30,000 migrants each month, while also expanding a Trump-era policy to make it easier to send many back to Mexico. Mr Biden believes the new policy, which will apply to asylum seekers from Cuba, Nicaragua, Haiti and Venezuela, will “substantially reduce” the number of people who attempt to cross the US-Mexico border illegally. While experts and immigration advocates believe it may be effective, many expressed concerns that an increased number of migrants may be sent to unsafe or inhumane conditions in Mexico.

The UK health secretary, Steve Barclay, is to sign a memorandum of understanding with BioNTech today to “ensure the best possible treatments are available as soon as possible” for cancer. The agreement means cancer patients in England will get early access to trials exploring mRNA therapies, such as cancer vaccines, possibly from as early as autumn. BioNTech worked with Pfizer to develop the widely used mRNA vaccination against Covid, and its partnership with the UK government could deliver 10,000 doses of personalised therapies to UK patients by 2030 through a new research and development hub.



Sterling is weaker than most major currencies in the early morning trade. The average UK house price fell for the fourth month in a row in December, according to Halifax. Property values decreased by 1.5% in December, after a 2.4% drop in November, a 0.4% decrease in October and a 0.1% dip in September. The annual rate of house price growth more than halved, to 2% in December, from 4.6% in November. This marked the lowest annual growth rate recorded since October 2019, when a 1.1% increase was recorded. Across the UK the average house price in December was £281,272.



Euro is stronger against sterling and weaker against the dollar this morning. European Union member states agreed to “strongly encourage” a requirement that would obligate all travellers coming from China, regardless of nationality, to present a negative COVID-19 test as the number of infections surges in the Asian country. The coronavirus test should be taken no more than 48 hours before embarking on the flight. Germany, Sweden and Belgium are imposing new Covid testing requirements on passengers travelling from China. German Health Minister Karl Lauterbach confirmed yesterday that Berlin will update its travel rules so that arrivals from China will need “at least one” test when entering the country.



The dollar is well bid against most major currencies overnight. Figures on the US labour market beat expectations yesterday, causing stocks to slide. Private sector employment rose by 235,000 in December, ahead of predictions, according to the figures from payroll processor ADP. Economists had expected a gain of 150,000. Meanwhile, unemployment benefits claim for the last week of December fell to 204,000 from 223,000 the previous week. The sustained jobs market strength raises the risk that the Fed could boost its target interest rate above the 5.1% peak the US central bank projected last month and keep it there for a while.



European markets were cautious this morning ahead of key inflation data for the euro zone, which is expected to show a further slowdown in consumer price increases. The pan-European Stoxx 600 index hovered just above the flatline in early trade, with basic resources adding 1.2% while utilities fell 0.4%. US stocks sank yesterday after economic data showed continued tightness in the labour market that is likely to keep the Federal Reserve on track for higher interest rates. The S&P 500 plopped 1.2%, while the Dow Jones Industrial Average shed 340 points, or 1.0%. The technology-heavy Nasdaq Composite tumbled by 1.5%.


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

8:00 a.m.: Germany Nov. Retail Sales, Factory Orders
8:00 a.m.: Denmark Nov. Unemployment
8:00 a.m.: Norway Nov. Industrial Production
8:30 a.m.: Switzerland Nov. Retail Sales
8:45 a.m.: France Nov. Consumer Spending
9:00 a.m.: Switzerland Dec. Foreign Reserves
10:00 a.m.: South Africa Dec. Asba Manufacturing PMI
10:30 a.m.: UK Dec. S&P Global/CIPS Construction CPI
11:00 a.m.: Euro-area Dec. CPI
11:00 a.m.: Euro-area Dec. Economic Confidence, Nov. Retail Sales
11:35 a.m.: ECB’s Centeno speaks
12:00 p.m.: Ireland Dec. CPI, Nov. Retail Sales
12:00 p.m.: UK to sell bills
2:30 p.m.: US Dec. Nonfarm Payrolls
5:15 p.m.: ECB’s Lane speaks


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