December 23, 2021

“The safe-haven dollar languished near an almost one-week low against its major peers on Thursday as investors adopted a more optimistic stance about the global economic outlook, despite the rapid spread of the Omicron coronavirus variant.”

Tim Hallinan, Trading Director

Main Headlines

President Biden said he is eager to run for re-election against Donald Trump in 2024 and expressed regret that he didn’t act more quickly to purchase at-home Covid-19 tests to distribute to the public. In an interview with ABC News that aired on Wednesday night, Mr. Biden, 79, said he planned to run for re-election if he remains healthy. Asked about running if that meant facing off against Mr. Trump, if he is the Republican nominee, Mr. Biden said that if Donald Trump was the Republican nominee “it would increase the prospect” of another election campaign. Allies of the President have repeatedly underscored his intentions to run for a second term. However, because of his age, some fellow Democrats have speculated about whether Mr. Biden will run and which candidates might take his place in the event that he doesn’t.

The UK government says it is monitoring Covid data after early studies found the Omicron variant may cause milder illness than the Delta variant. Scientists said the findings are good news but warned a big wave of cases could still overwhelm the NHS. The UK reported more than 100,000 new daily infections for the first time on Wednesday. New rules have been set out in Wales and Northern Ireland, but no further curbs have been announced in England. Boris Johnson has ruled out any changes before Christmas, but the prime minister has warned the variant “continues to surge across the country faster than anything we have seen before”.

GBP

Sterling is well-bid against most majors in early morning trade.  The UK and the EU have reached an agreement on how to divide up fish stocks they jointly manage. Under the Brexit Trade and Cooperation Agreement (TCA), the UK and the EU must negotiate total allowable catches (TACs) in the stocks they share in the Atlantic and the North Sea, on an annual basis. The European Council announced Wednesday it had approved a deal between the UK and the EU for 2022, including TACs for around 65 jointly-managed stocks and provisions for the overfishing of non-quota stocks. This is the second post-Brexit agreement on catch limits.

EUR

The euro is weaker than most major currencies overnight. The European Commission has launched legal action against Poland over a controversial ruling of the country’s Constitutional Tribunal, which said that the national constitution takes precedence over some EU laws. The decision adds up to numerous legal cases that Brussels has started against Poland to force its conservative ruling Law and Justice (PiS) party to reverse some of its radical judiciary reforms, which critics say put the country’s judges under political control. Belgium announced a flurry of closures in a bid to reopen schools after the Christmas holidays and ease tension on the health care system, as Omicron variant cases of coronavirus doubled over the past two days. Indoor venues such as cinemas, theatres, concert halls and conferences will have to close their doors, and public access to stadiums, sporting events and outdoor venues under tents will be banned.

USD

The dollar is stronger against the euro and weaker against sterling this morning. The Supreme Court on Wednesday said it would hold a special sitting to hear oral arguments early next month on whether the Biden administration can enforce Covid-19 vaccine-or-testing rules for large private employers, as well as vaccine requirements for many healthcare workers. The cases, set for fast-track arguments on Jan. 7, could go a long way to determining how much latitude the administration has to combat the coronavirus pandemic in the workplace. The House Select Committee investigating the Jan. 6 attack on the U.S. Capitol requested a meeting and information from GOP Rep. Jim Jordan, a close ally of Donald Trump, about his communications with the former president that day. Mr. Jordan’s office didn’t immediately respond to a request for comment.

Markets

Stocks advanced Thursday after the latest coronavirus studies stirred hopes that the global recovery can weather the omicron flareup. Japan helped MSCI Inc.’s Asia-Pacific share index rise for a third day. Technology stocks in Hong Kong lagged amid a slide in JD.com Inc. on Tencent Holdings Ltd.’s plan to distribute shares in the online retailer as a one-time dividend. Trading volumes thinned in many markets ahead of Christmas. European futures were in the green and U.S. contracts were steady after the S&P 500 closed in on its record high. Brighter U.S. consumer confidence and home sales aided sentiment, as did studies signalling omicron may be less likely to land patients in hospital than the delta variant.

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

10:00 a.m.: Italy Dec. consumer and manufacturing confidence, economic sentiment

11:00 a.m.: Greece 3Q unemployment rate

2:00 p.m.: Russia gold and forex reserves

Russia refinery outage data

President Putin annual news conference

U.S. PCE core deflator, new home sales, initial jobless claims, durable goods, consumer sentiment

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