October 19, 2021

“The greenback languished near the bottom of its recent range against major peers today, knocked back by weak U.S. factory data overnight and on market wagers of faster normalisation of monetary policy in other countries. A recovery in risk sentiment has also weighed on the safe-haven US currency.”

Sam Cornford – Partner, Head of Trading

Main Headlines 

Tributes are being paid to former US Secretary of State Colin Powell, who has died of Covid-19 complications aged 84. He was fully vaccinated. Powell became the first African-American secretary of state in 2001 under Republican President George W Bush. He also sparked controversy for helping garner support for the Iraq War. President Joe Biden, calling Powell a “dear friend”, said he had embodied the “highest ideals of both warrior and diplomat”. Shortly after the announcement, Fox News anchor John Roberts deleted his post on Twitter appearing to cast doubt on Covid-19 vaccine efficacy.

Around 30,000 new jobs will be created in the UK thanks to £9.7 billion of new foreign investment due to be announced by Boris Johnson, UK PM, at the Global Investment Summit today. The package of 18 deals will support growth in vital sectors such as wind and hydrogen energy, sustainable homes and carbon capture and storage, cementing the UK’s climate leadership for COP26 and beyond. It comes as the Department for International Trade launches a new Investment Atlas, an online platform designed to help international investors identify and execute high priority investment opportunities in the UK.

GBP

Sterling is well bid against most major s in the early morning trade. Homeowners in England and Wales will be offered subsidies of £5,000 from next April to help them to replace old gas boilers with low carbon heat pumps. The grants are part of the government’s £3.9bn plan to reduce carbon emissions from heating homes and other buildings. It is hoped no new gas boilers will be sold after 2035. The funding also aims to make social housing and public buildings more energy efficient. However, experts say the budget is too low and the strategy not ambitious enough.

EUR 

The euro is srtronger than the dollar and weaker than the pound this morning. The EU risks becoming a “centrally managed organism run by institutions deprived of democratic control”, Poland’s prime minister has warned amid an escalating battle over the rule of law between Warsaw and Brussels. In a letter to EU heads of government, Mateusz Morawiecki insisted Poland remained “a loyal member” of the union, which it joined in 2004. But he warned against penalising member states financially — as the commission is considering doing in its stand-off with Poland — and said that EU institutions exceeding their power was “dangerous to the continuation” of the union.

USD

The dollar is lower than most majors overnight. US coal-fired generation is expected to surge by 22% in 2021, the US Energy Information Administration said. That would mark the first annual increase in coal-fired electric power generation since 2014. In recent years, utilities ditched coal because of concerns about the climate crisis and due to the abundance of very cheap natural gas. US coal consumption fell in 2019 for the sixth straight year, dropping to the lowest level since 1964, as natural gas prices fell to record lows. Yet this trend has reversed in recent months because natural gas prices have spiked, making coal more competitive.

Markets 

Asian stocks rose Tuesday as technology shares rallied and the prospect of solid corporate earnings helped counter concerns stemming from elevated inflation. The dollar declined. MSCI Inc.’s Asia-Pacific equity index was at its highest since late September. Hong Kong outperformed and the city’s gauge of Chinese tech stocks surpassed its 50-day moving average. U.S. and European futures edged up after U.S. stocks gained, with the Nasdaq 100 leading the way. Treasury yields declined and a flattening in the yield curve paused. Australian bonds were whipsawed after the central bank in its latest minutes said it remains committed to maintaining highly supportive monetary conditions to bolster the economy. Gold was at $1,776.95 an ounce, up 0.7% .

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

9:05 a.m.: Norges Bank Bache speaks
9:30 a.m.: Riksbank’s Ingves and Floden open hearing in parliament
11:15 a.m.: ECB’s Rehn speaks
12:00 p.m.: BOE’s Mann speaks
1:00 p.m.: ECB’s Centeno, Elderson speak
2:00 p.m.: Hungary central bank rate decision
2:00 p.m.: ECB’s Panetta speaks
2:05 p.m.: BOE’s Bailey speaks
2:15 p.m.: Riksbank Breman speaks
3:00 p.m.: BOE’s Pill speaks
4:00 p.m.: ECB’s Lane speaks
U.K. PM Johnson hosts Global Investment Forum
China’s NPC Standing Committee meeting begins
API weekly U.S. oil inventory report

Corporate Events 

Earnings include Johnson & Johnson, Procter & Gamble, Philip Morris, Intuitive Surgical, Ericsson, Deutsche Boerse, Tele2, Netflix, BNY Mellon, United Airlines, Halliburton
Google launch event for new Pixel 6 phones

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