Morning Report

November 25, 2021

“The dollar traded near its highest position for a year in comparison with the euro and close to a five-year peak against the yen. A continued hawkish stance from Federal Reserve policymakers contrasted with a more dovish policy outlook from the ECB in Frankfurt and the Japanese Central Bank.”

Tim Hallinan, Trading Director

Main Headlines

A US inflation measure closely watched by the Federal Reserve posted its biggest year-on-year jump since the 1990s last month, adding to pressure on President Joe Biden as his White House scrambles to tame rising costs. The commerce department’s core personal consumption expenditure index, which strips out volatile food and energy costs, rose 4.1 per cent in October compared with a year ago. The jump represents a significant increase from the 3.7 per cent annual rise in September. The data were released as part of a report that also showed personal income rising 0.5 per cent in October compared with the preceding month, while consumption rose 1.3 per cent.

The UK government has set aside nearly £1.7bn to allow energy firm Bulb to continue supplying energy to customers. The firm was put into special administration on Wednesday, which will let it keep trading for the moment. Bulb will be run by administrator Teneo until a buyer can be found or until its customers have moved. The government loan will mean the administration is managed in a way that the lights stay on for Bulb’s 1.7 million customers. Teneo estimates it will cost around £2.1bn to keep Bulb trading until the end of April next year. Business Secretary Kwasi Kwarteng can provide more money for the company if needed.


Sterling is well-bid against the dollar but lower against the euro in overnight trade. The UK and France will keep “all options on the table” and agree to cooperate fully to prevent loss of life in the Channel. Johnson and Macron said trafficking gangs were risking lives, after 27 people died in the worst-recorded migrant tragedy in the Channel. Four people have been arrested in connection with the fatal crossing. The UK is to overhaul its development investment arm in a move designed to counterbalance China’s influence in emerging countries by offering “alternatives” to taking on “strings-attached debt”. Liz Truss, UK foreign secretary, will launch British International Investment (BII) on Thursday, a body that will leverage private capital to invest in countries across Asia, Africa and the Caribbean, offering an alternative to Chinese loans, which are seen by some in the west as a tool to spread Beijing’s influence.


The euro is well-bid against most majors overnight. Olaf Scholz will head a three-party coalition with broad plans for Germany’s transition to a green economy, under a deal to end 16 years of government led by Angela Merkel. After his Social Democrat party won federal elections in September, Scholz will go into power with the Greens and business-friendly Free Democrats. Climate protection forms a big part of the coalition deal. In a long overdue rapprochement, Italy and France heal their economic rift with the signing of the Quirinale Treaty, which Macron and Draghi will establish as a new motor of cooperation in sectors from defence to telecommunications. After just seven hours as Sweden’s first female prime minister, Magdalena Andersson resigned after her budget failed to win enough lawmaker support, with parliament instead backing a spending plan penned by her adversaries.


The dollar is lower against most majors in early morning trade. Weekly jobless claims fell sharply to the lowest level in 52 years, reflecting the labour market’s tightening as the economy recovers from the effects of the pandemic. Worker filings for initial unemployment benefits, a proxy for layoffs, dropped 71,000 to 199,000 last week, the lowest level since November 1969, the Labour Department reported Wednesday. The Biden administration invited Taiwan to participate in a meeting of democracies, further bucking Beijing’s long-pressed campaign to isolate the island diplomatically and testing a recent lessening of U.S.-China tensions. The inaugural Summit for Democracy, a virtual gathering scheduled for Dec. 9 and 10, aims to bring together more than 100 democratic governments and excludes China, Russia and some other countries with authoritarian leaders.


Asian stocks were steady Thursday and U.S. equity futures rose as traders weighed China’s efforts to cushion its economy as well as robust U.S. expansion that may hasten the withdrawal of monetary stimulus. MSCI Inc.’s Asia-Pacific share index snapped a three-day drop. Beijing urged local governments to boost investment to counter a growth slowdown, while the Chinese city of Chengdu sought to ease a cash crunch at property developers. It became the first major local administration to address the liquidity squeeze in the real estate industry, a key component of the economy. U.S. and European futures climbed after Wall Street gained overnight. U.S. data showed a solid economic recovery, including resilient consumer spending despite persistent price pressures. The latest Fed minutes indicated officials were open to a quicker removal of policy support to curb inflation.

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

8:00 a.m.: Germany Dec. consumer confidence, 3Q GDP

9:00 a.m.: ECB’s Villeroy speaks

9:10 a.m.: ECB’s Elderson speaks

9:30 a.m.: Riksbank interest rate announcement

10:00 a.m.: ECB’s Schnabel speaks

1:30 p.m.: ECB publishes Oct. policy meeting account

2:30 p.m.: ECB’s Lagarde speaks at legal conference

3:05 p.m.: BOE’s Haskel speaks

6:15 p.m.: ECB’s Villeroy speaks

6:30 p.m.: BOE’s Bailey speaks

U.S. Thanksgiving holiday

Insights Global Europe ARA oil product inventories

Corporate Events

Earnings include: Malayan Banking, Adevinta, Remy Cointreau.


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