Morning Report

Morning Report – Friday 23 April

Jon Robson, Head of Trading

“The euro has taken a hit from ECB’s decisive rejection of tapering bond purchases. Meanwhile, the dollar is reaching new multi-week lows ahead of the Federal Reserve meeting next week, which will most likely reiterate a similar message. As the expectations for a withdrawal of monetary easing are scaled back, the dollar’s gains will be capped by the downward pressure on Treasury yields.”

Main Headlines

Biden is preparing to announce a raft of tax increases on wealthy Americans to pay for a massive increase in funding for childcare and education. The tax increases would reverse some of the cuts passed in 2017 by former president Trump. Capital gains tax rate for those earning $1 million or more will almost double, from 20% to 39.6%. Coupled with an existing surtax on investment income, the new federal top rate for investors could be as high as 43.4%. The proposal is expected to be released next week in the forthcoming “American Families Plan.”

The reopening of the economy pushed UK consumer confidence to its highest level since the first Covid-19 restrictions, suggesting that the economy rebounded at the start of the second quarter. The UK consumer confidence index, a closely watched measure of how people view the state of their personal finances and wider economic prospects, rose one point to minus 15 in April, according to research company GfK. On some measures, households are feeling more confident than they were before the pandemic.


Sterling is stronger against most major currencies this morning. Ministers have asked business chiefs to form an “investment council” that will advise the government on how to boost the UK’s global competitiveness and help attract overseas investors to key national projects. More than 30 executives from large multinationals in a variety of industries have been approached to take roles on the new council under investment minister Lord Gerry Grimstone, the former chair of Standard Life Aberdeen. Companies invited to participate include Kraft Heinz, HP and Publicis.


The euro is higher versus the dollar and lower versus other majors overnight. ECB chief Christine Lagarde said that the talk of tapering emergency bond purchases is “simply premature”, even though the bank’s officials are confident the eurozone economy will rebound strongly later this year. Germany may lift its age-bracket system and make Covid shots available to all adults from the end of May, and would buy 30 million of Russia’s Sputnik V shots.


The dollar is lower against most majors in early morning trade. The Supreme Court on Thursday curbed the Federal Trade Commission’s long-time practice of seeking to recover ill-gotten gains in court from companies and individuals who cheat or mislead consumers, upending a central enforcement tool the agency has relied on for decades. The court said if the FTC wants to seek financial recoveries on behalf of consumers, it needs to rely on other legal provisions that require it to go through detailed administrative proceedings.


Shares were steady in China and rose in Hong Kong. MSCI Inc.’s regional gauge rose despite weakness in Japan. U.S. contracts edged up after the steepest decline in five weeks for the S&P 500 Index on a Bloomberg News report that the Biden administration is considering raising the tax on capital gains to 39.6% for those earning more than $1 million a year. Oil pared a weekly loss as traders considered signs of recovery in the U.S., alongside spikes in virus cases that threaten to further constrain activity in other key markets. Treasuries and the dollar dipped.

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

9:15 a.m.: France April PMIs

9:30 a.m.: Germany April PMIs

10:00 a.m.: ECB Survey of Professional Forecasters

10:00 a.m.: Euro-Area April PMIs

10:30 a.m.: U.K. April PMIs

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

12:30 p.m.: Russia rate decision

1:00 p.m.: Hungary’s Orban meets EU’s von der Leyen

3:45 p.m.: U.S. April PMIs

7:00 p.m.: Baker Hughes U.S. Rig Count

U.K., Italy, Greece sovereign debt rated by S&P

Corporate Events

Earnings and sales updates include LafargeHolcim, Honeywell, AmEx, Schlumberger, Kimberly-Clark


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