Morning Report – Tuesday 24th November

Jon Robson, Head of trading – “The dollar caught a bid yesterday subsequent to making fresh two and half year lows against a basket of currencies. Given the risk on mood across all asset classes, it is likely we will see these levels retested in the short term.”

Main Headlines

The US General Services Administration told President-elect Joe Biden that the transition can begin, and Biden will start by meeting Fed officials. Trump tweeted that he is still pursuing his legal claims, but in the best interests of the country, has recommended the GSA to do what they need to do to help Joe Biden.

Brexit discussions have continued this week, and the EU is reportedly close to an agreement, but as always, key differences still remain. The rumours that an agreement can be agreed this week have been dispelled, with the original soft deadline of 10th December still in place. According to the Telegraph, negotiators are considering a 10 to 15-year review clause.

GBP

The pound is trading higher against both the dollar and euro in trading this morning. Boris Johnson spoke yesterday about Coronavirus restrictions and replaced England’s lockdown which ends on 2nd December with tough restrictions which has no set end date. The day is light on the economic data front, so investors will be looking to position themselves ahead of a Spending Review on Wednesday led by Rishi Sunak.

EUR

The euro is mostly unchanged against the dollar in early morning trading today. Italy expects to have a budget deficit worth 10.4% and will likely need parliamentary approval to widen the deficit. A set of ECB speakers talk today including President Lagarde, but it is unlikely they will say anything of note. The euro is currently treading water, but in positive news, Coronavirus cases in the continent have started to stagnate.

USD

The dollar is mostly unchanged against a set of major currencies but is falling against the Japanese Yen. Trump’s cooperation with the GSA to help with the presidential transition has set a risk-on mood for assets and has seen the dollar fall as a consequence. Coronavirus cases are still at record highs and senior officials are set to brace themselves for what could be a messy weekend as the full effect of Thanksgiving travelling is felt.

Markets

Global equities are trading higher today after positive vaccine news yesterday and the transition process removing short term political uncertainty. Asian bourses are higher, while US S&P 500 futures are currently on the upside, while Bond yields have increased as well. Oil continues to increase, and is at its highest level since August.

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

7:00 a.m.: Germany 3Q GDP
7:45 a.m.: France Nov. Manufacturing Confidence
9:00 a.m.: Germany Nov. Ifo Survey
11:00 a.m.: U.K. Nov. CBI Retail Sales
11:00 a.m.: BOE’s Haskel speaks
2:00 p.m.: ECB’s Lagarde speaks
5:45 p.m.: ECB’s Lane speaks

Nigeria rate decision