Morning Report

October 25, 2021

“The U.S. dollar dipped at the beginning of the week amid the prospect of inflation hastening the pace of rate hikes outside the United States. Changing commodity prices, US growth data and central bank meetings ahead in Europe, Japan and Canada may contribute to raising rates.”

Tim Hallinan, Trading Director

Main Headlines

The US Supreme Court has agreed to hear a challenge to Texas’ law that restricts abortion rights early next month but will allow the law to remain in place until the appeal is heard. The law prohibits terminations of pregnancies after roughly six weeks, restricting the rights of women and their families in the state. This is the most restrictive curb on reproductive rights in the country, backed by a Republican governor and legislation. The Justice Department aimed to overturn the law but an appeals court allowed for it to be reinstated on constitutional grounds. Protests have taken place all over Texas, but particularly in Austin related to the abortion laws.

UK Chancellor Rishi Sunak will use this week’s Autumn Budget to shore up fragile public finances in the country, as well as focusing on the NHS, the “levelling up” agenda, tackling economic inequality and helping to boost the country’s skill base. The Chancellor is expected to be given a short-term Budget windfall by the Office for Budget Responsibility, which is set to upgrade its forecast for stronger growth across the economy in 2021 and 2022. Sunak admitted that UK public finances were more exposed to changes in interest rates which could cost the exchequer £25bn a year in the event of a 1% rise in inflation or interest rates.


Sterling is strong against most majors in overnight trade. Health Secretary Sajid Javid has stated that it may soon become mandatory for NHS workers to be double vaccinated, stating it was his intention, but final decisions were yet to be made. The NHS is also due to receive an extra £5.9bn in Wednesday’s Budget. The UK government is not planning strict economic measures throughout the winter to deal with Covid-19 cases accelerating in the United Kingdom, according to Chancellor Rishi Sunak. Richard Ratcliffe, husband of Nazanin Zaghari-Ratcliffe, the British-Iranian aid worker held in Iran on spying charges, has started a hunger strike in Whitehall to aim to get the UK government to do more to secure her release.


The euro is higher against dollar and lower against sterling overnight. Turkey’s President Recep Tayyip Erdoğan on Saturday said he had ordered the country’s Foreign Ministry to declare 10 ambassadors from western countries “persona non grata” after the diplomats called for the release of an imprisoned civil-society leader, Osman Kavala, who has been imprisoned for four years. Ambassadors from the United States, Germany, France, Denmark, Finland, the Netherlands, Sweden, Canada, Norway and New Zealand all signed the letter. Former European Council President, Former Prime Minister Donald Tusk was elected leader of Poland’s main opposition force, Civic Platform, in party-wide elections this weekend. Tusk, who ran unopposed, captured over 97 percent of votes on a turnout of 73.3 percent of party members.



The dollar is lower against most majors in early morning trade. Russia’s premier intelligence agency, the SVR, has launched another campaign to pierce thousands of U.S. government, corporate and think-tank computer networks, Microsoft officials and cybersecurity experts warned on Sunday, only months after President Biden imposed sanctions on Moscow in response to a series of sophisticated spy operations it had conducted around the world. President Biden stated that the US would not step back and not change its views on Taiwan, sending a warning to China that it would defend Taiwan in the event of an attack from mainland China. US intelligence agencies are warning critical industries in the country, including AI and biotech industries of the danger of doing business with China.


Asian stocks and U.S. futures were steady Monday as traders weighed inflation risks, China’s outlook and looming earnings reports from big technology firms. Turkey’s lira slid to a record low amid a diplomatic spat. Equities dipped in Japan and were mixed in China, where the central bank boosted a daily liquidity injection and officials expanded a property-tax trial. Signs that it would take at least five years before authorities impose any nationwide property tax bolstered some industrial metals. S&P 500 and Nasdaq 100 futures fluctuated, and the 10-year U.S. Treasury yield edged up. Federal Reserve Chair Jerome Powell on Friday flagged inflation could stay higher for longer. He made clear the Fed will soon start tapering bond purchases but stay patient on rate hikes. European futures climbed. The yen slipped.

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

9:00 a.m.: Czech Republic Oct. consumer and business confidence
9:00 a.m.: Norges Bank’s Bache takes part in workshop
9:00 a.m.: Turkey Oct. capacity utilization and real sector confidence
10:00 a.m.: Germany Oct. Ifo business climate, expectations and current assessment
10:50 a.m.: Riksbank’s Breman speaks
3:00 p.m.: BOE’s Tenreyro speaks
3:00 p.m.: Belgium Oct. business confidence
Singapore Energy Summit, with speakers from Shell, IEA

Corporate Events

Earnings include Facebook, Kimberly-Clark, Aker Carbon Capture, Shimao Services, LG Chem, Lennox International, Sun Communities, Packaging Corp of America and Universal Health Services.

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