June 9, 2023

“The US Dollar stabilised on the last day of the week after experiencing substantial losses against major currencies yesterday. An increase in US Initial Jobless Claims, rising from 233,000 to 261,000 for the week ending June 3 was likely the cause. No significant economic data releases are expected from the Eurozone or the US before the weekend.”

Sam Cornford, Partner – Head of Trading

Main Headlines

Crypto exchange Binance.US announced yesterday that it is temporarily suspending deposits in US dollars, and its banking partners are preparing to halt the withdrawal of fiat dollars as early as June 13. This move comes shortly after US regulators filed a lawsuit against Binance and its CEO Changpeng Zhao. The US division of the world’s largest cryptocurrency exchange stated in a tweet that it is taking proactive measures to transition to a crypto-only exchange. Trading, staking, deposits, and withdrawals in cryptocurrencies will continue without interruption, according to the exchange’s notice to customers.

Britain and the United States endorsed a new “Atlantic Declaration” yesterday, aiming to enhance cooperation on significant economic challenges, including clean energy, critical minerals, and artificial intelligence. The joint declaration described this partnership as the first of its kind, covering various aspects of economic, technological, commercial, and trade relations between the two nations. The plan entails strengthening supply chains, developing future technologies, and making investments in each other’s industries, as outlined by the office of British Prime Minister Rishi Sunak.

GBP

Sterling is stronger against Euro and weaker against the Dollar this morning. Credit ratings agency Moody’s warned yesterday that house prices in Britain could decline by 10% over the next two years, and a more severe downturn in the housing market could potentially lead to a lengthy recession. Last month, unexpectedly high inflation data in the UK caused a significant rise in market interest rates as investors hurried to account for anticipated increases in borrowing costs from the Bank of England. Mortgage lenders responded by offering substantially higher interest rates, with current rates for two-year deals surpassing 5%, compared to less than 3% just a year ago.

EUR

Euro is weaker than most major currencies in the early morning trade. The European Commission granted approval yesterday for €8.1 billion in state aid to support the production of semiconductors in Europe. A total of 56 companies across 14 member states, including Austria, the Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Malta, the Netherlands, Poland, Romania, Slovakia, and Spain, will benefit from this financial support to carry out 68 projects. The Commission anticipates that this public funding will attract €13.7 billion in private investments, mobilizing a total of nearly €22 billion by 2032, the expected completion date for all projects.

USD

The Dollar is well bid against most major currencies overnight. heavy smoke engulfed Washington DC yesterday, leading the Metropolitan Washington Council of Governments (MWCG) to issue a “Code Purple” advisory, indicating unhealthy air quality for all individuals. As a result, the Nationals baseball game was postponed, the National Zoo closed for the day, and schools moved recess indoors. The smoke originated from wildfires devastating Canada and has been gradually moving southward. The air quality in Washington has since been downgraded to “Code Red,” while New York City is under a “Code Orange,” indicating continued unhealthy conditions for vulnerable individuals. New York City has experienced an orange haze for the past two days as the smoke drifts further south and west.

Markets

The UK’s FTSE 100 index edged up this morning, supported by gains in AstraZeneca shares following approval from US regulators for an experimental antibody. Additionally, payments provider Network International surged after reaching an agreement to go private. US stocks closed higher yesterday, with the S&P 500 entering a bull market. Investors were digesting fresh economic data ahead of the upcoming Federal Reserve meeting and a leadership shakeup at GameStop. The S&P 500 has now risen more than 20% from its October 2022 lows.

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

10:00 a.m.: Italy April Industrial Output
10:00 a.m.: ECB’s Guindos speaks
12:30 p.m.: Russia rate decision
12:45 p.m.: ECB’s de Cos speaks
2:00 p.m.: Ukraine 1Q GDP; May CPI
2:00 p.m.: Poland central bank publishes minutes

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