Morning Report – Tuesday 1st December

Jon Robson, Head of Trading

“Although there has been no further news concerning a Brexit agreement, Sterling has been poised to make a move higher in anticipation and is touching three month highs against the dollar. An agreement is heavily anticipated this week however, any delay may encourage speculators to take short positions in the pound.”

Main Headlines

Senior EU officials are starting to become frustrated that emergency Brexit measures have not been agreed in the case that a Brexit deal falls through. In the event of no-deal, national Governments will have to come up with their own measures.

Moderna is set to submit its vaccine for approval in the EU and US imminently, while Pfizer/BioNTech is set to get the go-ahead from the UK and could begin a vaccine rollout as early as 7th December. It is, as of yet, unclear whether the vaccine will be mandatory.

GBP

The pound is higher against both the euro and the dollar in early morning trading today. PM Johnson faces a tough House of Commons vote on Covid-19 restrictions that are stricter than were originally in place before the November lockdown. Labour have already stated they will abstain from the vote, so we will see the extent of how large the group of Conservative rebels are. The UK is set to release manufacturing PMIs for November, which will likely see a sharp decline in economic activity.

EUR

The euro was firm against the dollar overnight. The single currency briefly flirted with the $1.20 handle yesterday but fell due to end of month profit taking, as well as a small rebound in the dollar. Hungary and Poland are still holding up the EU Covid-19 emergency package which was originally planned for July. Eurozone manufacturing PMI data released today will likely show a fall in economic activity due to various lockdowns across the continent.

USD

The dollar is losing ground against a set of major currencies, although unchanged against the Japanese Yen, and is at its lowest level since early 2018. Joe Biden unveiled his economic team yesterday with Janet Yellen at the helm as Treasury Secretary, this was well received by investors who herald her strong record as a dovish Fed Chair and good relationship with Jerome Powell. Powell and Mnuchin will be testifying to the Senate Banking Committee later today, which could be a fiery affair.

Markets

Global equities are rising this morning, as the imminent vaccine rollout has led investors to look into the future for a rosier outlook. The S&P 500 closed down yesterday, but this wasn’t enough to halt a record breaking month for the index, while Bitcoin also hit a record high. Oil prices fell yesterday as there was bad news coming out of the OPEC+ meeting, but this shouldn’t be anything to be too concerned about, and could be put down to political posturing.

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

7:00 a.m.: U.K. Nov. Nationwide House Prices
7:00 a.m.: Turkey Nov. Manufacturing PMI
9:15 a.m.: Spain Nov. Manufacturing PMI
8:45 a.m.: Italy Nov. Manufacturing PMI
8:50 a.m.: France Nov. Manufacturing PMI
8:55 a.m.: Germany Nov. Manufacturing PMI, Unemployment
9:00 a.m.: Euro-Area Nov. Manufacturing PMI
9:00 a.m.: Italy 3Q GDP
10:30 a.m.: U.K. Nov. Manufacturing PMI
11:00 a.m.: Euro-Area Nov. CPI
10:00 a.m.: OECD publishes economic outlook
5:00 p.m.: ECB’s Lagarde speaks