Fri, Jan 22, 2021 @ 22:03 GMT
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Week Ahead – Fed Meeting, Barrage of Data, and Tech Earnings

With President Biden now in office, markets will be on alert for any remarks from US Senators about whether they’d support the massive stimulus bill he proposed. A tough negotiating battle could see the final proposal being watered down. The Federal Reserve will meet as well. No policy changes...

Sunset Market Commentary

Markets January PMI’s confirmed the gut feeling of an economic setback caused by fresh and extended lockdown measures to fight Covid-19 (mutants). The EMU composite PMI declined from 49.1 to 47.5, broadly in line with consensus. The underlying divide between strength in the export-oriented manufacturing sector (54.7 from 55.2) and...

Dollar Rebounds Broadly as Risk Appetite Recedes

Dollar rebounds broadly today following receding risk appetite. Investors are apparently paring their gains in stocks. Swiss Franc and Euro are the next strongest, followed by Yen. On the other hand, Australian Dollar and Sterling are the worst performing. In particular, the Pound was weighed down by sharp deterioration...

A Tough End to the Week

Stock markets are ending the week on a negative note after a period of consolidation so far this month. It’s been a strange start to the year following a bumper two months, with vaccine optimism keeping sentiment upbeat despite the growing near-term Covid risks. The political distraction in the US...

UK PMI composite dropped to 40.6 in Jan, sharp contraction in Q1

UK PMI manufacturing dropped sharply to 52.9 in January, down from 57, missed expectation of 53.0, a 7-month low. PMI Services dropped to 38.8, down from 49.4, missed expectation of 45.3, an 8-month low. PMI Composite dropped to 40.6, down from 50.4, an 8-month low. Chris Williamson, Chief Business Economist...

Stocks Cool Off From Record Highs

US futures in the red. Major events next week could dictate risk sentiment. Bullish case for equities still valid. Oil benchmarks pare weekly advance. The rally in global stocks is taking a breather before the weekend, having posted a new record high on Thursday. Most Asian benchmark indices are...

Ineffective Vaccines A Key Tail Risk For Global Recovery

Market movers today Today's focus is on preliminary PMIs for the euro area (including Germany and France), the UK and the US. Most PMIs are likely to show that we are still in the middle of a manufacturing boom, while the service sector is struggling due to restrictions. This...

Sunset Market Commentary

Markets The ECB left key policy parameters unchanged. The deposit rate remains at a negative -0.5%. APP runs at a €20bn pace/month. Net bond buying under PEPP will continue until March 2022 while maturing securities will be rolled-over at least until end 2023. The ECB has repeatedly said they could...

Keep A Very Close Eye At Sterling

Markets The British pound unexpectedly took center stage yesterday. EUR/GBP declined sharply at the very start of the European open, temporarily breaking below key support at the 0.886 area. UK December inflation topped expectations but failed to explain the move from a timing-perspective. Moreover, with inflation still well below the...

Pound Hits 32-Month High

The British pound has posted slight gains in the Tuesday session. Currently, GBP/USD is trading at 1.3619, up 0.25% on the day. Pound breaks 1.37 level The British pound has posted modest gains this week, but the currency did reach a milestone of sorts earlier on Wednesday. The pound briefly broke...

UK PMIs to Highlight Lockdown Pain but Johnson’s Vaccination Drive Buoys Pound

Having only just come out of lockdown number two, much of the United Kingdom finds itself shut down again as the recently discovered new variant of Covid-19 is spreading even faster than previously known strains. This new highly contagious version of the virus left the government no choice but...

Sunset Market Commentary

Markets Sterling grabbed the market spotlights in an otherwise calm trading session. At the onset of European dealings, EUR/GBP hovered around levels seen earlier this week, close to, mostly slightly below 0.89. This initially continued after the release of (marginally) higher than expected UK December inflation (headline rising from 0.3%...

Euro Down Again as Recovery Lost Momentum, Commodity Currencies Jump

Euro weakens notably today as recovery momentum diminished quickly. Dollar is not gaining much, though, as commodity currencies trade broadly higher with new wave of buying. Australian Dollar is once again leading others. Canadian Dollar shrugs off weaker than expected inflation reading, and await BoC rate decision and the...

UK CPI rose to 0.60% yoy in Dec, core CPI rose to 1.4% yoy

UK CPI rose to 0.6% yoy in December, up from 0.3% yoy, above expectation of 0.5% yoy. CPI core rose to 1.4% yoy, up from 1.1% yoy, above expectation of 1.3% yoy. RPI also rose to 1.2% yoy, up from 0.9% yoy, above expectation of 1.1% yoy. Full release here....

Canadian Dollar in Spotlight, With Eyes on BoC and Oil Price

Canadian Dollar is a main focus today with BoC rate decision featured. Recent strong risk-on markets haven't given the Loonie much lift. It's upside is somewhat capped as oil price turned into consolidation after last week's spike. Also, traders turned cautious before BoC's indication on the chance of a...

BoE Haldane: Recovery probably at rate of knots from Q2

BoE Chief Economist Andy Haldane said current tougher lockdown restrictions are threatening to bring the UK economy into a double-dip recession. That next slump could be "shorter, sharper shock" than the last one in 2007. Though, unemployment could be capped as long as Chancellor of the Exchequer Rishi Sunak maintains...

Sunset Market Commentary

Markets European traders put comfort from this morning’s constructive Asian sentiment though mood was a little less ebullient. German ZEW investor sentiment beat consensus with the expectations component jumping from 55 to 61.8 in January. The current conditions subseries remains deep in negative territory but surprised on the upside after...

Sunset Market Commentary

Markets Trading on global markets was mainly order driven and technical in nature. There were no eco data with market moving potential in EMU. In addition, European markets also lacked any guidance from the other side of the Atlantic as US markets are closed in observance of the Martin Luther...

Weekly Economic and Financial Commentary: Consumers Pull Back as COVID Continues to Surge

U.S. Review Consumers Pull Back as COVID Continues to Surge Retail sales fell 0.7% in December, the third straight monthly decline. Sales are still up 2.9% over the year, however. The CPI advanced 0.4% in December (1.4% over the year). Inflation remains tepid, with core prices up 0.1% in the...

Week Ahead: Biden Inauguration, More Lockdowns, and Central Bank Meetings

On Wednesday, January 20th, Joe Biden will be sworn in as the 46th President of the United States.  After a controversial four years, President Trump will leave office, one way or another.  Hopefully Congress can move forward with Joe Biden’s economic agenda as the coronavirus continues to plague the...

Week Ahead – Earnings Season in Focus

Optimism remains despite Covid-19 surge Earnings season is under way and will become an increasing focus in the coming weeks. New variants of Covid-19 are causing major surges across many countries which is forcing more severe and extended restrictions. Economies are coping well under the circumstances but will come under...

Week Ahead – ECB, BoJ and BoC Meet But All Eyes on US Capitol

The first of the new year’s central bank meetings will get under way next week and it will be a heavy schedule on the data front as well. The European Central Bank, Bank of Japan and Bank of Canada will almost certainly be debating the latest setback to the...

Weekly Focus – Biden Inauguration Next Week amid Fed Repricing

President-Elect Joe Biden is due to be inaugurated on Wednesday. While the event is normally a pure formality, tensions are high in the US, with concerns about another riot. We expect the Biden administration to be more stimuli-friendly near-term, as Biden told us when he presented his economic plan...

Sunset Market Commentary

Markets Stimulus plans, both from central bankers and from fiscal authorities, are very helpful to inspire markets. In particular, upcoming/hoped-for fiscal stimulus often was more important as a driver for the reflation trade, rather than good news on corona or on the economic recovery. However, plans tend to lose their...

Stocks Down Despite Fed Assurances

US futures are pointing to a slightly softer open on Friday, ending the week on a slightly negative note despite a massive stimulus proposal and reassuring comments from the Fed. Joe Biden unveiled his $1.9 trillion stimulus plan on Thursday, a number more or less in line with what had...

Yen and Swiss Franc Rise as Sentiments Weighed Down by Weak Data

Yen and Swiss Franc are trading stronger together with Dollar today, as stock markets are pulling back slightly. On the other hand, New Zealand Dollar is leading other commodity currencies lower. US President-elect Joe Biden's new spending package was generally ignored by investors. Instead, worse than expected US data...

UK NIESR projects -3.4% GDP contraction in Q1

NIESR estimated a 0.9% growth in UK GDP in Q4 of 2020, implying a total contraction of -9.8% for the whole year. With tight restrictions and some post-Brexit adjustment, Q1 is forecast to have negative growth on -3.4%. It added, "the short-term negative economic impact of lockdowns should be...

UK GDP Slides But Beats Forecast

The British pound has lost ground in the Friday session. Currently, GBP/USD is trading at 1.3645, down 0.29% on the day. The markets are awaiting the release of US Retail Sales (13:30 GMT). UK GDP contraction smaller than expected The markets were braced for a sharp decline in UK growth for...

Biden’s $1.9 Trillion Stimulus Plan Sparks Profit-Taking

Stock markets drift lower as Biden's relief plan raises execution questions Dollar undecided, caught between mild risk aversion and dovish Powell Euro starts pricing in the risks, sterling smiles as UK vaccinations accelerate Today: US retail sales, big bank earnings, and German leadership contest Markets worry Biden's proposal will...

UK GDP dropped -2.6% mom in Nov, services as main drag

UK GDP dropped -2.6% mom in November, better than expectation of -4.0% mom. That's the first decline since six consecutive monthly increases. GDP was back to -8.5% below the levels seen in pre-pandemic February. Also, GDP dropped -8.9% in the 12 months to November, comparing with the annual decline...