Risk sentiment re-establishes – Forex Action
Remarks / Observations
- There is some support for the appetite for risk.
- Confidence data from the EU showed that the most recent outbreak of virus cases had hit sentiment in the region.
- RBA Dec Minutes reiterated the position which is committed to a very favorable monetary condition. The emergence of a variant of the omicron virus was a new source of uncertainty, and the risk of recovery would be clearer in February 2022. Reiterated forward-looking guidance would not increase rates until the CPI climbs well. sustainable within a range of 2 to 3%.
- The Japanese government has said it is considering increasing the real GDP forecast for FY22 from 2.2% to at least 3.0%, citing the expected impact of the additional budget.
- Japan Cabinet Office (Govt) Dec’s economic report raised its overall economic assessment for the first time in 17 months. He has now seen the national economy recover as severe conditions from the coronavirus gradually ease.
- CDC: The omicron variant accounts for almost 75% of C-19 cases in the United States. Texas Health officials have announced their first death associated with the omicron variant.
- President Biden will announce the Covid measures in a speech on Tuesday, December 21. The speech said it was not about locking down the country but focusing on the unvaccinated and setting up testing sites across the country.
- The Chinese port of Dongxing is suspending customs operations due to coronavirus.
- From ECB Guindos (Spain): Inflation in the eurozone has not been as temporary as expected.
- British Prime Minister Johnson is not preparing to announce further Covid restrictions until Christmas. Wait until the data is clearer before taking further action.
- Turkish President Erdogan has announced new tools in the rules of the market economy to mitigate exchange rate volatility. New financial alternatives to citizens would not have to convert currency savings TRY (Lira) into foreign currency due to volatility. Withholding tax on Turkish government bonds to be canceled (Note: TRY currency moved away from record lows of 18.36 to test the below 11.20 level on Erdogan’s bailout, which would offset lira holders in banks in the event of further depreciation of the currency).
- The Biden-Manchin talks on Sunday reportedly ended with a feeling that BBB talks would continue in some form next year. Manchin (D-WV) reportedly made an offer last week to support a $ 1.8 billion ‘Build Back Better’ bill that included universal spending on pre-K and climate, but excluded enlargement the child tax credit. Biden did not accept the proposal due to the lack of a child tax credit.
Speakers / Fixed income / FX / Commodities / Erratum
- Indices [Stoxx600 +0.67% at 470.48, FTSE +0.72% at 7,250.20, DAX +0.42% at 15,303.89, CAC-40 +0.32% at 6,891.88, IBEX-35 +0.80% at 8,308.06, FTSE MIB +0.50% at 26,308.00, SMI +0.37% at 12,635.90, S&P 500 Futures +0.53%].
- Market Focal Points / Key Themes: European indices open higher across the board, but moderated some of their gains during the morning trading; all sectors start the day in the green as a better sense of risk is attributed to the developers of drugs against the new variant of covid; the growth sectors are materials and energy; while sectors slower to increase include health care and utilities; the Irish government will initiate the sale of part of its stake in AIB; The British CMA seeks a more in-depth investigation into the Veolia / Suez agreement; Zardoaya receives increased offer from Otis; Schroders confirms its acquisition of a stake in Greencoat Capital; Fiskars sells its NA watering unit; earnings expected in the next US session include General Mills, Blackberry and Rite Aid.
- Consumer discretionary: Tomtom [TOM2.NL] + 5% (partnership with Volkswagen).
- Finance: Allied Irish Bank [ALBK.IE] -1% (the Irish government will sell part of its stake).
- Healthcare: Zur Rose Group [ROSE.CH] -7% (German rule for digital prescriptions).
- Industrialists: Zardoya Otis [ZOT.ES] + 2% (increased offer), Manz AG [M5Z.DE] + 10% (order).
- Technology: Infineon [IFX.DE] + 1.5% (Micron result).
- Kazimir (Slovakia) from the ECB said there was a risk that high inflation would persist longer. Reiterated the Council’s position that the ECB is not preparing to hike rates in the near future but should act if the inflation outlook changes in the period 2023/24. Reiterated view that no sign of a wage-price spiral is observed at this time, but could increase if high inflation persists.
- UK government official Barclay noted that Chancellor Sunak says more about the covid economic package for the hospitality industry in the near future.
- The Greek Debt Agency’s (PDMA) 2022 debt issue would seek to raise € 12 billion and tap the bond market at least 4 times during the year. Issue at least one ticket per quarter with an advance financing program.
- Israel Fin Min Liberman said there was no need for additional pandemic measures at this time.
- Thailand’s finance ministry recorded 4.0% GDP growth in 2022 as the economy reopens after the pandemic.
- President Biden will outline the steps to combat the variant of the Omicron virus in an upcoming speech. The United States plans to mail 500 million free COVID-19 test kits home from January 2022 and is preparing to deploy federal medical personnel to hospitals.
Currencies / Fixed Income
- Risk appetite was trying to find new legs and this is providing some retracement in the USD and JPY linked pairs. Session pushing back on some of the EU confidence data that showed the most recent surge in virus cases had hit sentiment in the region.
- EUR / USD hovering around the 1.13 area and well contained in its recent range.
- GBP / USD higher to 1.3255 at mid-session.
- The currency TRY (Lira) moved away from recent record lows of 18.36 to test the 11.15 level on Erdogan’s bailout for its biggest gain since 1983. Erdogan announced measures to compensate lira holders in banks in the event of further depreciation of the currency.
- (NL) Netherlands Dec Consumer confidence index: -25 vs. -19 before.
- (NL) Netherlands Consumer expenditure in October Y / Y: 8.5% against 4.6% previously.
- (FI) Finland Nov Unemployment rate: 6.0% vs. 6.0% previously.
- (DE) Germany Jan GfK Consumer confidence index: # v -2.7e.
- (United Kingdom) Nov Public Finances (PSNCR): £ 37.0 billion compared to £ 61.6 billion previously; PSNB (former banking groups): £ 17.4 billion against £ 16.0; Net borrowing: £ 16.6 billion versus £ 15.3 billion; Central Government RCN: £ 13.1bn compared to £ 2.6bn previously.
- (CH) Swiss trade balance for November (CHF): 6.2B vs. 5.5B previously; Real exports M / M: + 1.6% against -2.1% previously; Real imports M / M: + 4.3% against -4.5% previously; Watch Exports Y / Y: 11.9% against 12.5% previously.
- (DK) Denmark Nov. Retail sales M / M: -0.3% vs. + 1.3% previously; Y / Y: + 1.5% against -2.5% previously.
- (DK) Denmark Dec. Consumer confidence: -2.1 against -2.0 before.
- (TR) Turkey Dec. Consumer confidence: 68.9 compared to 71.1 previously.
- (HU) Hungary Q3 current account: – € 2.3bn versus – € 1.9m.
- (SE) Sweden Dec. Consumer confidence: 98.7 versus 99.0e; Manufacturing confidence: 127.3 v 126.3 before; Economic Trends Survey: 117.1 v 117.6 before.
- (CH) Swiss M3 money supply in Nov. Y / Y: 1.9% against 2.5% previously.
- (HK) Hong Kong Nov CPI Composite Y / Y: 1.8% vs. 1.8% e.
- (IS) Iceland Dec. CPI H / M: 0.5% against 0.4% previously; Y / Y: 5.1% against 4.8% previously.
- (IS) Iceland nov. M / M salary index: 0.3% against 0.5% previously; Y / Y: 7.5% against 7.6% previously.
- (IT) Italy Oct. Industrial sales M / M: 2.8% vs. 0.2% previously; Y / Y: 16.9% against 15.1% previously.
- (PL) Poland Nov Real retail sales M / M: -1.0% vs. -3.1% e; Y / Y: 12.1% vs. 8.6% e; Y / Y Retail Sales: 21.2% vs. 16.1% e.
- (PL) Poland Nov Construction Production Y / Y: 12.7% vs. 5.1% e.
- (IT) Italy Nov PPI M / M: 1.3% vs. 9.4% previously; Y / Y: 27.1% against 25.3% previously.
Issue of fixed income securities
- (IL) Israel 12-month CPI forecast for December: None vs. 1.8% previously.
- (MX) Citibanamex survey of economists.
- 5:25 am (EU) Daily liquidity statistics from the ECB.
- 05:30 (HU) The Hungarian Debt Agency (AKK) sells 3-month bonds.
- 5:30 a.m. (EU) ECB award under the 7-day Main Refinancing Invitation to Tender (MRO).
- 6:00 a.m. (UK) Dec. Sales reported by CBI Retailing: 25th against 39 before; Total distribution of declared sales: No is v 43 before.
- 6:45 am (US) Correction of the daily Libor.
- 07h00 (TR) Turkey will sell bonds.
- 07h00 (MX) Mexico Q3 Global supply and demand: 9.5% ev 23.3% before.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 8:00 am (UK) Announcement from Russia on the next OFZ bond issue (held on Wednesday).
- 8:30 a.m. (United States) 3rd quarter current account balance: -205.0 $ before -190.3 M $ before.
- 8:30 am (CA) Canada Oct Retail sales M / M: +1.0% ev -0.6% before; Retail sales (excluding auto) M / M: + 1.5%, variation -0.2% before.
- 8:55 a.m. (US) Weekly Redbook LFL sales data.
- 9:00 a.m. (EU) ECB weekly foreign exchange reserves.
- 9:00 a.m. (EU) Weekly update of the ECB’s QE bond purchase.
- 10:00 a.m. (EU) Euro zone Dec. Advancement of consumer confidence: -8.1 ev -6.8 before.
- 10:00 am (MX) Mexico Weekly international reservations.
- 12:30 p.m. (BR) Brazil Nov Tax collections (BRL): 157.3Be v 178.7B before.
- 2:00 p.m. (AR) Argentina Q3 Unemployment rate: No against 9.6% before.
- 2:00 p.m. (AR) Argentina Q3 current account balance: no estimate vs. $ 2.8 billion previously.
- 4:00 p.m. (NZ) New Zealand Consumer Confidence Index in December: Not version 96.6 before.
- 4:30 p.m. (US) Weekly API oil inventories.
- 5:00 p.m. (CO) December report from the Central Bank of Colombia.
- 18:01 (NL) Netherlands Nov. Real Estate Price Index M / M: No est v 1.0% before; Y / Y: No is v 18.3% before.
- 18:30 (AU) Australia Nov Leading Index M / M: No est v 0.2% before.