Morning Report – Wednesday 2nd December

Jon Robson , Head of Trading

“Sterling has taken a bit of a hit this morning on EU Chief Negotiator Barnier’s comments suggesting a deal still hangs in the balance. He is said to have told EU Ambassadors there may be no post Brexit deal however, we suspect this is political posturing. We expect some sort of agreement as a base case but do not envisage any announcement this week.”

Main Headlines

Boris Johnson encountered a huge Conservative rebellion, but still managed to pass his “tiered” system for Covid-19 through the Commons by a margin of 291-78. The measures will be in place until February at the earliest according to the PM, who will review the system then.

A bipartisan group of Senators has proposed a $908 billion fiscal stimulus package to break the fiscal deadlock. Nancy Pelosi and Steve Mnuchin spoke yesterday, but both gave nothing away while Fed Chair Powell said at the Senate Banking Committee that stimulus is essential to the recovery.

GBP

The pound is unchanged against both the euro and dollar in early morning trading today. Brexit negotiations are supposedly going well, although the UK recently rubbished reports that discussions were “in the tunnel”. The plan is for a deal to be agreed in time for the 10th December Summit, however, as always, key differences still remain.

EUR

The euro is trading mostly unchanged against the dollar this morning, after closing at a near 2-year high. EU regulators predict that they won’t start distribution of the Pfizer/ BioNTech until January, which is far behind the UK (set to start next week) and so we may see pull back away from recent highs in the single currency.

USD

The dollar is unchanged against a set of major currencies but is losing ground against the Japanese Yen. Joe Biden will reportedly discuss with his advisors whether or not to remove tariffs on Chinese goods. Like Trump, Biden sees China as a threat but doesn’t want to explore a route that will damage US trade and international reputation.

Markets

Asian equities were mixed at the Open this morning while US futures are down as investors are taking a pause after a record breaking month. Oil prices continued to slide after the OPEC+ meeting yesterday did not form any plan on when to continue planned output. Bond prices also fell, but remain at an elevated level.

Main Economic Data/Central Banks/Government (All times GMT)

7:00 a.m.: Germany Oct. Retail Sales
8:00 a.m.: Spain Nov. Unemployment
9:00 a.m.: Italy Oct. Unemployment
10:00 a.m.: Euro-Area Oct. PPI, Unemployment
1:15 p.m.: U.S. Nov. ADP Employment
6:00 p.m.: BOE’s Haskel speaks

Poland Rate Decision
Corporate Events
Earnings include RBC, Snowflake, Avon Rubber, Clas Ohlson