Morning Report – Monday 15 February

Jon Robson, Head of Trading

“Since last week’s disappointment over employment data, market participants are looking for tangible evidence that the U.S. economy is recovering as fast as expected. With no such evidence available at the moment, the dollar is pinned near two-week lows, and the pound reached the highest since April 2018”.

Main Headlines

Donald Trump was acquitted by the Senate on Saturday after an unprecedented second impeachment trial that exposed a Republican Party deeply divided over Trump’s continued role in public life. Republican Senator Lindsey Graham said Donald Trump remains the party’s “most potent force” even after his second impeachment. The trial’s failure to convict Mr. Trump shows that Biden will have a difficult time achieving bipartisanship to pursue priorities from pandemic relief to measures to address climate change and infrastructure renewal.

More than 15 million people in the U.K. have had their first dose of a coronavirus vaccine, in a move hailed as a “significant milestone” by Prime Minister Boris Johnson. The NHS will on Monday begin vaccinating people aged between 65 and 69. The announcement came after more than 60 of the governing party’s backbench MPs wrote to the prime minister over the weekend demanding a “road-map” for lifting all restrictions.

GBP

Sterling is higher versus other major currencies this morning. More than 10% of the U.K. workforce is out of a job and struggling to tap government benefits, exposing economic scars set to remain long after the coronavirus fades. Meanwhile, a top European Commission official has said that London and Brussels plan to set up a top-level emergency hotline in response to escalating problems over Northern Ireland in the weeks since the UK left the EU’s single market.

EUR

The euro is stronger against the dollar and weaker against the pound overnight. The ex-head of the European Central Bank, Mario Draghi, has been sworn-in as Italy’s next prime minister. Mr Draghi put together a unity government of the main political parties, following the collapse of the previous administration last month. Elsewhere, Brussels will allow data to continue to flow freely from the EU to the UK after concluding that the British had ensured an adequate level of protection for personal information.

USD

The dollar is lower against most majors in the early morning trade. The pace of the coronavirus outbreak in the U.S. continued to ease as the country’s week-to-week average fell to its lowest in almost four months. A top Biden administration health official warned Americans not to get complacent as the potentially more lethal variant first found in the U.K. spreads across the country.

Markets

Stocks rose Monday as the vaccine rollout and slowing virus outbreaks spurred bets on a global recovery. West Texas Intermediate crude topped $60 a barrel amid an arctic freeze in parts of the U.S. South Korean and Japanese shares led Asia higher, with the Nikkei 225 hitting 30,000 for the first time since 1990. Data showed Japan’s economic expansion beat expectations. S&P 500 and European futures advanced. U.S. markets are shut for Presidents’ Day, while exchanges in China and Hong Kong are also closed Monday. Treasury futures dipped in Asian trading, and Australian bonds slumped after U.S. yields jumped Friday. Bitcoin slipped after a weekend rally. Gold was little changed.

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

8:00 a.m.: Norway January trade balance

9:00 a.m.: Turkey January budget balance

10:00 a.m.: Poland January CPI

11:00 a.m.: Euro-area December trade balance, industrial output

Corporate Events

Earnings include City of London Investment, Aker Solutions, Early Equity, Oncimmune, Keros Therapeutics

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