Morning Report

March 24, 2023

“After a slight dip in Wall Street’s main indexes, the US Dollar appears to have stabilised. Throughout the European morning, EURUSD experienced a decline in momentum and lost ground by 1 per cent. Germany’s Composite Purchasing Managers’ Index (PMI) increased to 52.6 in early March. Later in the day, the US will release February Durable Goods Orders data, as well as S&P Global’s preliminary Manufacturing and Services PMI surveys for March.”

Tim Hallinan – Trading Director


Main Headlines

Swiss banks Credit Suisse and UBS Group AG are under investigation by the US Department of Justice (DOJ) over allegations that their financial professionals assisted Russian oligarchs in evading sanctions. The DOJ also issued subpoenas to employees of major US banks, including the Swiss banks, in order to determine which bank employees dealt with sanctioned clients and how those clients were vetted over the past years. The subpoenas were sent before Credit Suisse was taken over by UBS.

Cash-strapped British households cut back on eating out and takeaways in February and opted to buy food at supermarkets and discount stores, resulting in an unexpected boost to retail sales, according to official data released today. The Office for National Statistics reported that British retail sales unexpectedly rebounded by 1.2% in February from the previous month, returning sales volumes to their pre-pandemic level. Consumers in the UK have been hit by inflation, which reached an 11.1% 41-year high in October and has remained in double digits since.


Sterling is stronger against euro and weaker against the dollar this morning. The Bank of England increased interest rates for the 11th consecutive time yesterday, but also stated that a surprising resurgence in inflation would probably diminish quickly, sparking speculation that it had ended its string of rate hikes. The BoE’s nine rate-setters voted 7-2 in favour of a 25 basis-point increase in Bank Rate to 4.25%, sounding more positive about the outlook for Britain’s sluggish economy while acknowledging the risks posed by turmoil among global banks. This rate rise extends a run of increases that began in December 2021, though it was the Monetary Policy Committee’s smallest increase since June.


Euro is weaker than most major currencies in the early morning trade. European Union (EU) leaders agreed yesterday to support a revamp of the single market, simplified regulations, and other measures to ensure that the bloc can compete with the United States and China as an industrial leader in green and digital technologies. High energy costs and US President Joe Biden’s Inflation Reduction Act, which provides $369 billion of green subsidies that typically only apply to products made in North America, have heightened EU concerns about a potential exodus of European industry. Europe’s competitiveness in relation to the world’s two largest economies has become a major concern 30 years after the EU established an internal market that is largely seamless for goods but inadequate for services.


The dollar is well bid against most major currencies overnight. Yesterday, US Treasury Secretary Janet Yellen reiterated her willingness to take further action to ensure the security of Americans’ bank deposits in the midst of turbulence in the banking system. Yellen made this statement during a hearing of the US House of Representatives Appropriations subcommittee, saying that they have used significant tools to quickly prevent contagion in the past and can use them again if they perceive that the failure of an institution would pose a systemic risk.


This morning, European stock markets were down as investors reflected on a week of central bank rate hikes and the most recent banking news. The pan-European Stoxx 600 index was down 1.4% at 9:47 a.m. in London, with all sectors posting declines or remaining flat. Despite policymakers’ assurances that the system is stable after recent volatility, banks led the losses yesterday, with the sector dropping 4.5%. Citigroup downgraded the European banking sector to “neutral” from “overweight” this week, citing the effects of ongoing monetary policy tightening. Financial services stocks fell by 2%, mining stocks dropped by 2.1%, and oil and gas stocks fell by 3%.


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

8:00 a.m.: UK Feb. Retail Sales
8:00 a.m.: Norway Feb. Credit Indicator Growth
8:00 a.m.: Sweden Feb. PPI
8:45 a.m.: France 4Q Wages
9:00 a.m.: Spain 4Q GDP
9:15 a.m.: France March S&P Global PMIs
9:30 a.m.: Germany March S&P Global/BME Manufacturing PMI
10:00 a.m.: Euro-area March S&P Global PMIs
10:15 a.m.: ECB’s Nagel speaks
10:30 a.m.: UK March S&P Global/CIPS PMIs
2:45 p.m.: US March S&P Global PMIs
3:00 p.m.: Belgium March Business Confidence
4:30 p.m.: ECB’s Centeno speaks
5:00 p.m.: BOE’s Mann speaks
6:00 p.m.: Baker Hughes US rig count



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