Morning Report – Friday 15th January

Main Headlines

Joe Biden has called on congressional leaders to focus on tackling Covid-19 rather than Donald Trump and the fallout from the Capitol Hill attack. The presence of the national guard in Washington shows that the country is in desperate need of unity.

Biden’s $1.9 trillion stimulus plan is currently being scrutinised however, what is clear is that a large stimulus package is on the way. This will add further support to global asset prices and continue to reduce demand for safe haven currencies such as the US dollar.

GBP

The pound is slightly lower against both the euro and dollar in trading this morning. UK senior officials are considering tearing up worker protections enshrined in EU law as part of the post-Brexit overhaul of U.K. labour markets which will likely cause outrage among trade union leaders. UK November GDP figures released this morning show that the economy declined 2.6% which is above the expected -4.6%, and this is most likely due the November lockdown enacted on the 5th of the month.

EUR

The euro is unchanged against the dollar in early morning trading today. Italy look to be falling into further disarray as the Government is pushing for an even bigger than expected deficit expansion just as the economy looks to be getting over the worst of the Coronavirus pandemic. France and Spain CPI figures will also be released this morning and are expected to come in just a touch higher than 0 percent.

USD

The dollar is higher against a set of major currencies including the Japanese Yen. US jobless claims came in at 965,000 which is their highest level since August, curtailing expectations that claims would fall for a fourth consecutive week. Jerome Powell has also recently said that it is far too soon for the Fed to taper its QE programme or lift interest rates.

Markets

Global equity futures are on the decline as investors are scrutinising Joe Biden’s proposed $1.9 trillion fiscal stimulus package. Now that the initial shine has passed, investors are turning their attention to how the package will be financed and more importantly what it means for corporate taxes. Oil and bond prices have also fallen this morning.

Main Economic Data/Central Banks/Government (All times GMT)

7:00 a.m.: U.K. Nov. GDP, Trade, Industrial and Manufacturing Production
7:45 a.m.: France Dec. CPI
8:00 a.m.: Spain Dec. CPI
8:00 a.m.: ECB’s Visco speaks
10:00 a.m.: Euro-Area Nov. Trade
12:00 p.m.: Israel Dec. CPI
1:00 p.m.: Russia Nov. Trade
6:00 p.m.: Baker Hughes U.S. Rig Count

U.K. sovereign debt rated by Fitch, Russia rated by S&P
Germany’s CDU party begins virtual convention