Morning Report

September 26, 2022

“Sterling plunges to a record low against the dollar and euro as the tax-cutting package in the UK Mini-Budget alarms investors. The currency continued to experience severe negative pressure in Asian trading session at the start of this week. EURUSD is trading at a new twenty-year low. Eurozone consumer prices (HICP) for September and US core-personal consumption expenditures (PCE) for August are the main data to take notice of this week.”

Sam Cornford, Partner – Head of Trading

Main Headlines

US Representative Adam Schiff, a Democratic member of the special panel investigating the Jan. 6, 2021, attack on the Capitol, said he likely would support approving criminal referrals against those involved in the violence, but that it would take a unanimous decision by its nine members. The committee has focused much of its year-long investigation on the actions of then-President Donald Trump and his associates in the aftermath of the November 2020 presidential election culminating with the deadly Jan. 6 storming of the Capitol. Trump has falsely claimed without evidence that widespread voter fraud tainted the election result and that he should have been declared winner.

The value of foreign direct investment into the north of England has risen by almost three-quarters in the past five years while falling in every other part of the UK, including London. Analysis of market knowledge and authorities statistics carried out by the Northern Powerhouse Partnership lobby group, whose economists include former Treasury minister Lord Jim O’Neill, additionally reveals that the north has elevated its share of the UK’s FDI initiatives from 19 per cent to 33 per cent over the same time, overtaking London. The number of jobs created in the north rose by 18 per cent.


Sterling is weaker than most major currencies in the early morning trade. UK chancellor Kwasi Kwarteng has vowed to double down on his controversial tax-cutting drive despite investor jitters, leaving Conservative MPs and traders braced for further market turbulence. Kwarteng said yesterday that there was “more to come” and insisted that Friday’s announcement of £45bn in tax cuts was just the start. After the announcement the pound dropped to its lowest point since 1985, and many Tory MPs have privately expressed fears that sterling will take another pummelling this week. Leading economists and investors warned that the Bank of England might have to introduce emergency interest rate rises to prop up the currency.


Euro is stronger against sterling and weaker against the dollar this morning.  Giorgia Meloni won a clear majority in yesterday’s Italian election, setting herself up to become the country’s first female prime minister at the head of the most right-wing government since World War II. Meanwhile, The European Union’s plan to contain the energy crunch will give member states leeway to cut electricity consumption less than currently proposed, Italian newspaper Corriere della Sera reported, citing a draft document. The European Commission aims to publish on Sept. 28 a document detailing future steps the bloc could take to ease the crisis.   The proposal under consideration says each state must reduce energy consumption by 5% per hour during peak price hours, representing at least 10% of all hours from Dec. 1, 2022, through March 31, 2023.


The dollar is well bid against most major currencies overnight. US Dollar Index (DXY) remains on the front foot around 113.80, after renewing the 20-year top near 114.70, as risk-aversion intensifies today. In addition to the sour sentiment, hawkish comments from the Fed policymakers also favour the US dollar. Fed Chairman Jerome Powell said on Friday, “We are committed to using our tools.” Following him, Fed Vice Chair Lael Brainard mentioned that inflation is very high and is hitting low-income families ‘hard’. During the weekend, Atlanta Federal Reserve President Raphael Bostic said that he still believes the central bank can tame inflation without substantial job losses given the economy’s continued momentum,


The pan-European Stoxx 600 was down 0.4% around an hour into trading, having recouped opening losses of roughly 0.6% before pulling back again.  The S&P 500 also fell by over 4%. The FTSE 100 pared early gains and dipped 0.1%, while the mid-cap FTSE 250 shed 0.7%. Utilities dropped 2% while tech stocks added 1.9%. Concern for the global growth outlook has been increasing as inflation remains high and central banks resort to aggressive interest rate hikes to try to tame rising prices. Shares in Asia-Pacific fell sharply today as negative sentiment continues to weigh in on markets. Oil and gas and mining stocks fell 1.3% and 1.9%, respectively, as crude and metal prices dropped due to a surging dollar and fears of lower demand from an expected global recession.

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

9:00 a.m.: ECB’s Nagel, Simkus and de Guindos speak
9:00 a.m.: Spain Aug. PPI
9:30 a.m.: ECB’s Panetta speaks
9:30 a.m.: EU to sell bonds
10:00 a.m.: Germany Sept. IFO business climate, expectations
10:00 a.m.: ECB’s de Cos speaks
11:00 a.m.: OECD publishes interim economic outlook
2:50 p.m.: France to sell bills
3:00 p.m.: ECB’s Lagarde speaks
4:30 p.m.: ECB’s Centeno speaks
6:00 p.m.: BOE’s Tenreyro speaks
France presents budget

Corporate Events

Earnings include Dye & Durham
Meta faces UK damages claim


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