Morning Report – Wednesday 17 February

Jon Robson, Head of Trading

“The dollar has bounced back from a three week lows. The U.S. currency is supported by soaring U.S. bond yields, which were in turn driven by increasing inflationary concerns amid a rise in energy prices.”

Main Headlines

The US President extended foreclosure moratorium by three months as a temporary relief for homeowners while the $1.9tn stimulus plan is being prepared. The US President said that the economy would come “roaring back” if Congress approved the $1.9tn fiscal stimulus plan, as he promised to deliver widespread coronavirus vaccinations and a firm recovery in the second half of 2021.

British companies are looking to introduce a “no jab, no job” arrangement for employees, as the government admitted that it was “up to businesses” if they wanted workers or customers to have Covid vaccination passports. As more than 6m workers across Europe remain on government job support schemes the calls for retraining are growing.

GBP

Sterling is weaker against the euro and stronger against the dollar overnight. Close to half a million people have fallen behind on rent or mortgage payments as a result of coronavirus, according to a study published on Tuesday, which urged ministers to intervene to prevent the debt crisis from worsening. The estimates provide the starkest evidence to date of a ballooning rent and mortgage debt crisis which has been fanned by the pandemic.

EUR

The euro is lower against most majors this morning. Spain is setting out its priorities for spending €140bn in EU recovery funds to revive its economy and revitalise the small business sector, despite domestic criticism of the government’s management of the programme. Italy draws strong demand in first bond sale of Draghi era.

USD

The dollar is higher versus other major currencies in the early morning trade. Millions are having to brave freezing temperatures as Texas struggles to restore power to millions during Arctic blast. The New York Fed said firms in that state are optimistic conditions will improve over the next six months in comments on the latest Empire State Manufacturing Survey, with the business activity index at its highest level in several months.

Markets

The yield on benchmark 10-year Treasuries dipped to around 1.30% after touching the highest since February 2020. Bonds in Australia and New Zealand tumbled. Asian equities were mixed, though South Korea underperformed. S&P 500 futures were flat after the gauge closed slightly lower on Tuesday. European contracts edged lower. Elsewhere, oil fluctuated around $60 a barrel in New York amid a deepening energy crisis in the U.S. that has crippled the petroleum industry. China remains shut for a week-long holiday and will reopen Thursday. Bitcoin climbed back above the $50,000 level.

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

8:00 a.m.: U.K. Jan. CPI, RPI, PPI

8:00 a.m.: EU27 Jan. new car registrations

10:00 a.m.: Belarus rate decision

11:00 a.m.: Euro-Area Dec. construction output

11:00 a.m.: U.K. sells bonds

11:30 a.m.: Germany sells bonds

2:30 p.m.: U.S. Dec. retail sales

5:00 p.m.: BOE’s Ramsden speaks

8:00 p.m.: FOMC Minutes

European Commission unveils trade policy review and bio-defense program

German political parties hold Ash Wednesday meetings

NATO defense ministers hold two-day virtual summit

Corporate Events

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