Morning Report – Monday 12th October

Main Headlines

Coronavirus continued to dominate the news cycle over the weekend. According to a recent study, scientists found that Covid-19 can survive on services for up to 28 days, much higher than the 2-3 days originally thought. Boris Johnson is also set to increase tough new restrictions on Northern England today, which has led the hospitality industry to issue a legal challenge.

A $1.8 trillion fiscal stimulus bill, put forward by the White House was rejected by Nancy Pelosi on Saturday. On Sunday, the White House called on Congress to release $135 billion in unspent aid to small businesses to include into the package. Fed Chair Jerome Powell, continues to push on Congress to do its part on fiscal stimulus rather than rely on too much Quantitative Easing.

French President Emmanuel Macron will insist on tough enforcement rules for any UK trade deal at an EU summit this week. Many EU leaders are sceptical of a verbal agreement, or ‘agreement in principle’ as Boris Johnson has shown with the internal market bill, that he cannot be trusted.

GBP

The pound continues to build on last weeks gains and is trading higher against the dollar and euro this morning. Investors are confident that the UK will get a Brexit deal, which the EU may look at and debate at a EU Leader’s summit starting on Thursday. David Frost and Michel Barnier continue Brexit talks today.

EUR

The euro is trading flat against the dollar and losing ground to the pound in early morning trading today. Christine Lagarde will be speaking today on the global economy at an IMF-World Bank meeting. The focus could turn to further stimulus in the EU as some of her ECB colleagues stressed over the weekend that more stimulus will be necessary.

USD

The dollar is losing ground against most major currencies this morning, including the pound and Japanese Yen. US stimulus talks dragged on over the weekend as both Trump and Pelosi took swipes at each other. In election news, according to a recent Washington Post poll, Trump trails Biden by 12 points.

Main Economic Data/Central Banks/Government (All times BST)
7:00 a.m.: Germany Sept. Wholesale Price Index
8:00 a.m.: Turkey July Unemployment, Aug. Current Account
8:00 a.m.: ECB’s Villeroy speaks
10:45 a.m.: Nobel memorial prize in Economics announced
12:00 p.m.: ECB’s Lagarde speaks
2:00 p.m.: Russia Aug. Trade Balance
3:00 p.m.: BOE’s Haskel speaks
5:00 p.m.: BOE’s Bailey speaks

U.S. and Canada bond markets closed
Institute of International Finance membership meeting
Milken Institute 2020 Global Conference