Morning Report

Morning Report – Friday 12 February

Jon Robson, Head of Trading

“The effects of stronger U.S. economic growth compared to elsewhere and rapid vaccine deployment are being outweighed by ongoing reflationary fiscal and monetary policy. It is difficult to see the dollar rebounding significantly so long as the Fed continues to push back against the prospect of tapering asset purchases and raising interest rates.”

Main Headlines

Joe Biden announced that his administration had finalised deals for another 200 million doses of the two coronavirus vaccines authorised in the United States. The new deals don’t immediately expand access to shots, which remain in short supply throughout much of the country. The administration says it has now secured enough vaccine to inoculate every American adult, but Biden warned that logistical hurdles would most likely mean that many Americans will still not have been vaccinated by the end of the summer.

The U.K. economy posted stronger-than expected growth in the fourth quarter, averting the immediate prospect of another pandemic-induced recession. Gross domestic product rose 1% from the third quarter, double the reading estimated by economists, the Office for National Statistics said Friday. Output grew 1.2% in December alone, recouping some of the loss incurred the previous month when England was placed in a four-week lockdown.


Sterling is lower versus other major currencies this morning. The government said it would create a £20m Brexit support fund to help small businesses handle changes to trade rules with the EU since the end of the Brexit transition on December 31. Trading in euro-denominated swaps flooded out of London last month to rival financial centres in New York, Amsterdam and Paris, in the latest evidence of the blow dealt by Brexit to the UK financial centre.


The euro is stronger against the pound and weaker against the dollar overnight. The U.K. and the European Union remain locked in a standoff over how to implement the Brexit deal in Northern Ireland, despite more than three hours of talks between top officials on Thursday. Mario Draghi is set to become Italy’s prime minister with an overwhelming parliamentary majority after supporters of the Five Star Movement voted in favour of joining his forthcoming national unity government.


The dollar is slightly higher against the pound and the euro in the early morning trade. US banks are pressing the Federal Reserve to extend concessions that loosened capital requirements when the pandemic struck, arguing that financial markets would be at risk if the relief expires as planned next month. First-time claims for unemployment benefits fell to 793,000 last week, as the US labour market showed signs of improvement as it attempts to rebound from the winter surge in coronavirus cases.


Stocks traded with little fanfare Friday as holidays across Asia curbed trading, and U.S. and European equity futures were little changed. Crude oil extended an overnight retreat. Japanese shares ticked higher and Australian stocks slipped amid a snap lockdown for Victoria state. S&P 500 futures dipped after the benchmark on Thursday eked out a gain to close at an all-time high. Strength in tech shares ensured the Nasdaq 100 outperformed. Applications for U.S. state unemployment benefits fell slightly last week in a sign that the labour market is still gradually improving. Treasuries edged up. Gold dipped. Walt Disney Co. climbed post market after strong growth in its streaming services. Bitcoin climbed to a record.

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

9:00 a.m.: Spain Jan. CPI

11:30 a.m.: Russia rate decision

12:00 p.m.: U.K. sells bills

7:00 p.m.: Baker Hughes U.S. rig count

Corporate Events

Earnings include EMS-Chemie, Rosneft

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