Morning Report – Wednesday 14 April 2021

Jon Robson, Head of Trading

“The dollar fell to multi-week lows against the euro as U.S. bond yields dipped, thus reducing the currency’s yield attraction, as solid demand for a thirty-year bond auction trumped rises in consumer inflation. This will probably mean the Federal Reserve is extremely unlikely to reduce its quantitative easing and low interest rates earlier than it has pledged to do.”

Main Headline

Joe Biden has proposed a summit meeting with Vladimir Putin in a third country in the coming months “to discuss the full range of issues facing the United States and Russia”. He also called on Moscow to de-escalate tensions following a build-up of Russian military in Crimea and on Ukraine’s borders. Today, the President is expected to announce the withdrawal of all US forces from Afghanistan by September 11 this year, the 20th anniversary of the terror attacks that sparked America’s longest-running war.

The scandal over Greensill Capital’s links to the UK government has deepened after it emerged that, Bill Crothers, a senior civil servant began working for the finance firm as an adviser while still serving in Whitehall – and that his role was approved the Cabinet Office. This is following revelations about former PM David Cameron’s lobbying on behalf of the failed company. Johnson & Johnson said it would delay the planned rollout of its Covid-19 vaccine in Europe after US health agencies called for a pause of the jab’s use on Americans while they investigate several incidents of rare blood clots.

GBP

Sterling is stronger than most majors in early morning trade. The UK economy edged higher in February, helped by a partial rebound in trade with the EU as businesses learnt to deal with lockdown and new Brexit border restrictions. Data from the ONS showed that in the second month of the imposition of Brexit border controls there was a £3.7bn rise in exports to the bloc following a £5.7bn monthly drop in January. Trade was heavily affected by Covid-19 and associated restrictions on business. The UK economy still has a long climb back to normality when restrictions are lifted.

EUR

The euro is stronger than the dollar but weaker than the pound overnight. Europe’s low-tax nations have responded positively to the US President’s plans for a radical reform of global corporate taxation, even though they will lose out. The proposal would give countries the power to raise corporate tax from US tech giants and other large multinationals, among others. This would be a blow to Ireland, the Netherlands, Luxembourg, Malta and Cyprus, all popular bases for the world’s largest companies, which have fiercely defended their right to set corporate tax at a level of their choosing.

USD

The dollar is significantly lower against most currencies. US consumer prices rose by the most in nearly nine years in March, spurred by pent-up demand and rising petrol prices as the economy continued to recover from coronavirus-driven lockdowns. The consumer price index rose a seasonally adjusted 0.6 per cent last month compared with February, the labour department said on Tuesday — the quickest pace since August 2012. This was fuelled in part by a jump in the petrol index, which surged 9.1 per cent and accounted for nearly half the increase.

Markets

Most Asian stocks rose Wednesday following gains in U.S. equities and bonds, as investors shrugged off a higher-than-forecast rise in U.S. inflation to focus on upcoming earnings and the global recovery. Hong Kong’s benchmark outperformed and tech stocks lifted China, but shares dipped in Japan amid concerns about the slow vaccine rollout. A gauge of global stocks climbed toward record levels. European contracts advanced and U.S. equity futures were steady following all-time highs for the S&P 500 and Nasdaq 100 indexes. The White House said the U.S. inoculation campaign remains on track despite a pause in Johnson & Johnson doses amid health concerns. Gold was at $1,746.25 an ounce.

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

9:00 a.m.: Spain March CPI

9:00 a.m.: ECB’s Guindos presents 2020 report

11:00 a.m.: Euro-Area Feb. industrial production

11:00 a.m.: U.K. sells linkers

11:30 a.m.: Germany sells bonds

1:00 p.m.: Turkey sells gold sukuk, bonds; Russia sells bonds

1:00 p.m.: Israel March CPI

1:45 p.m.: ECB’s Panetta presents results of public consultation on the digital euro

3:30 p.m.: Russia sells bonds

4:00 p.m.: ECB’s Lagarde speaks

4:30 p.m.: BOE’s Haskel speaks

4:30 p.m.: EIA Crude Oil Inventory Report

7:00 p.m.: ECB’s Schnabel speaks

Talks between Ukraine, Russia and the Organization for Security and Co-operation in Europe

Corporate Events

Coinbase listing debut

Earnings include JPMorgan, Goldman, Wells Fargo, Tesco, Hella, TomTom

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