November 15, 2022

“The greenback rose against the yen but lost more ground to the euro in the morning session after Federal Reserve Vice Chair, Leal Brainard, said interest rates need to keep rising to battle inflation. Her comments on Monday suggested that the central bank will hike rates at a slower pace going forward.”

Tim Hallinan – Trading Director

Main Headlines

Joe Biden and Xi Jinping used their first in-person meeting as leaders to signal a desire to improve US-China ties after relations between the two powers plunged to a multi-decade low. With Taiwan tensions hanging over the meeting, the leaders agreed that senior officials would “maintain communication” on a range of global issues, including climate change, economic stability and food security, a White House readout of the meeting said. The US president later said that Antony Blinken, secretary of state, would visit China for further talks.

Jeremy Hunt is preparing a raid on electricity generators with a new tax on their “excess returns” as he tries to find money to pay for an inflation-linked rise in benefits and pensions while extending help for households with energy bills. The chancellor will also use Thursday’s Autumn Statement to lift the existing windfall tax on oil and gas companies from 25 per cent to 35 per cent, while extending it for another two years until 2028. The government had been considering a “revenue cap” on electricity generators in line with a similar move by the European Union.

GBP

Sterling is stronger against the dollar and weaker against euro this morning. The UK’s tax authority is suing EY over alleged misrepresentations made during the negotiation of a tax settlement relating to British property investor and Conservative donor Jamie Ritblat. UK consumers should prepare for late deliveries during the Black Friday sales next week and in the lead up to Christmas as retailers brace for strikes by Royal Mail postal workers during the key shopping period. The deal between the UK and France to expand co-operation in preventing cross-Channel migration by small boats is hobbled by the lack of an arrangement for processing migrant.

EUR

Euro is well bid against most major currencies overnight. Unemployment in France eased back to its lowest in 14 years in the third quarter, a figure that should be welcomed by the government as it battles soaring inflation. The unemployment rate edged down to 7.3% from 7.4% in the previous three months, the INSEE statistics agency said, staying in the 7.3%-7.4% range that has prevailed since the last three months of 2021. German authorities are stepping up preparations for emergency cash deliveries in case of a blackout to keep the economy running as the nation braces for possible power cuts arising from the war in Ukraine.

USD

The dollar is weaker than most major currencies in the early morning trade. The vice-chair of the US central bank has said the Federal Reserve still has “additional work to do” in its fight against inflation, even as she backed slowing the pace of rate future increases. William J. Burns, the director of the Central Intelligence Agency, met with his Russian counterpart in Turkey on Monday to warn Russia against the use of nuclear weapons in Ukraine, a White House spokesman said. Former President Donald Trump has promised a “special announcement” today evening at Mar-a-Lago, in Palm Beach, Florida, where he is widely expected to kick off his 2024 presidential run.

Markets

Bulls piled back into global stock markets, encouraged by an easing in Sino-US tensions and growing confidence that the Federal Reserve will be able to slow its rate hiking pace. Europe’s Stoxx 600 benchmark fluctuated, while US equity futures pointed to a recovery, with index futures on the S&P 500 and the Nasdaq 100 up around 0.5% and 0.8% respectively. In Asia, Hong Kong’s Hang Seng benchmark rose as much as 3.6%. Treasury yields and the dollar slipped. Markets have turned risk-on in recent days, trading off a softer-than-expected US data print that many reckon will allow the Fed to raise rates in 50 basis-point increment, after three 75 basis-point hikes.

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

7:10 a.m.: ECB’s Villeroy speaks
8:00 a.m.: Sweden Oct. CPI
8:00 a.m.: Norway Oct. Trade Balance
8:00 a.m.: UK Oct. Jobless Claims; Sept. Average Weekly Earnings; ILO Unemployment
8:45 a.m.: France Oct. CPI
9:00 a.m.: Spain Oct. CPI
9:30 a.m.: Netherlands 3Q GDP
10:00 a.m.: Poland 3Q GDP
11:00 a.m.: Germany Nov. ZEW Survey
11:00 a.m.: Eurozone 3Q GDP
1:30 p.m.: Riksbank’s Floden speaks
6:30 p.m.: ECB’s Elderson speaks
Nigeria Oct. CPI
Bloomberg New Economy Forum in Singapore
G-20 summit in Bali
IEA monthly oil market report

Corporate Events

Earnings include Gazprom, Infineon, Vodafone, Alcon, Imperial Brands, Sea Ltd., Walmart

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