Morning Report

March 31, 2023

“The Eurozone is set to release its bloc-wide inflation measurement for March today. While the headline rate is anticipated to decrease from 8.5% to 7.1%, the core rate is expected to slightly increase from 5.6% to 5.7%. Similarly, the US core-PCE inflation rate for February is predicted to remain stable at 4.7%. These statistics carry a certain level of risk for the euro and dollar currencies.”

Tim Hallinan – Trading Director

Main Headlines

Joe Biden has urged banking regulators to strengthen their supervision and regulation of large regional banks, while the White House has announced its support for reforms in the aftermath of the Silicon Valley Bank’s collapse. Policymakers in Washington are now shifting their focus from the emergency response to the banking crisis to considering long-term measures to strengthen the financial system. The White House has proposed that federal regulators, in consultation with the Treasury department, should review Trump-era rules that relaxed liquidity and capital requirements for banks with assets between $100bn and $250bn.

This morning, the UK announced its agreement to join the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with Prime Minister Rishi Sunak claiming that it demonstrates the government’s commitment to seizing “post-Brexit freedoms”. Talks on Britain joining the CPTPP took two years to conclude, and the UK will be the first country to join the group since its establishment in 2018. Sunak has stated that the trade deal will not only bring economic benefits but also enhance the UK’s “Asia-Pacific” tilt in its foreign policy.


Sterling is stronger against euro and weaker against the dollar this morning. The Low Pay Commission has confirmed that low-paid workers in the UK will receive a pay rise that matches inflation, as the country’s minimum wage increases to £10.42 per hour from April. The rise of 92p in the main rate of the national living wage represents a 9.7% increase on 2022, and it means that around 2 million workers will now be paid at or near the statutory earnings floor. The UK government has admitted that its new net zero strategy will not reduce greenhouse gas emissions enough to meet its legally enforceable targets.


Euro is weaker than most major currencies in the early morning trade. Turkey’s Parliament approved a Bill to allow Finland to join NATO, clearing the way for Helsinki to join the Western defence alliance as war rages in Ukraine. German savers are getting cold feet about deposits held abroad despite juicier interest rates for fear of getting embroiled in a crisis like the one that hit Silicon Valley Bank. Denmark has major shortcoming in its ability to defend its territory and meet its NATO commitments despite pledges to increase defence spending. More than 100 wildfires broke out in Spain’s northern Asturias region yesterday, most of them started on purpose by arsonists and others, as temperatures soared to record highs.


The dollar is well bid against most major currencies this morning. Global dealmaking has experienced its weakest start to the year in a decade, and the transatlantic banking crisis slows down risk-taking. The first quarter of 2023 has seen the slowest start to the year since 2013, as rising interest rates put an end to the flurry of deals that followed the onset of the Covid-19 pandemic and the cheap borrowing costs it brought. The World Bank has warned that technology decoupling and trade restrictions resulting from US-China tensions are hurting knowledge generation and innovation in both superpowers, posing a long-term threat to growth across Asia.


European stocks and US equity futures were steady as a gauge of global shares headed for a second-straight quarterly gain, underscoring investor optimism in the face of banking turmoil and elevated interest rates. Retail stocks led modest gains in the Stoxx Europe 600 Index, while Shell Plc climbed after it said it’s splitting up its global renewable power business. Contracts on the S&P 500 rose about 0.1%, while those on the Nasdaq 100 were little changed, after the underlying gauge rose 0.9% overnight, pushing further into a bull market.

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

8:00 a.m.: UK 4Q GDP; March Nationwide House Price Survey
8:00 a.m: Germany Feb. Import Price Index, Retail Sales
8:45 a.m.: France March CPI
9:00 a.m.: Czech 4Q GDP
9:00 a.m.: ECB’s Kazaks speaks
9:55 a.m.: Germany March Unemployment
10:00 a.m.: ECB’s Visco speaks
11:00 a.m.: Euro Area March CPI; Feb. Unemployment Rate
11:00 a.m.: Italy March CPI
12:00 p.m.: Poland March CPI
2:30 p.m.: US Feb. Personal Income, PCE Deflator
5:00 p.m.: ECB’s Lagarde speaks


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