Today’s news headlines:
‘Joe Biden begins horse-trading over $1.9tn stimulus package’. Republican lawmaker, Susan Collins, has announced partial agreement of the proposed stimulus support package by the Democrats. It means a reduction of the amount of direct payments to citizens, from $1400 to $1000, and making it available to fewer families by capping eligibility at $50,000 of annual income per person. However, the consensus for ramping up vaccination rates is clear, as Ms Collins’ proposal includes $160bn for the coronavirus response. (Financial Times)
‘Sunak agrees to tie own hands and stick with Tory ‘triple tax lock’. The Chancellor has held firm in next month’s budget by remaining true to the Conservatives “triple tax lock” which prevents him from raising the rates of income tax, national insurance or value added tax. It is believed this position may force the Chancellors hand in increasing taxes in other areas, such as corporation tax and capital gains tax, a move which will not be met kindly given the restrictions many companies have faced over the last year. Moreover, the Chancellor’s interest in future tax increases is a warning to Tory MP’s calling for increased government spending in response to the coronavirus pandemic. (Financial Times)
Today's events, rates, and data
The market mood is positive amid signs that US stimulus talks are progressing well, there is optimism around vaccines and some relative calm surrounding highly volatile stocks such as GME. A risk on mood is driving both EUR/USD and GDP/USD higher. Sterling’s move has been ascribed to the UK reporting substantial progress in its vaccination efforts.
French Preliminary CPI 0.0% vs 0.2% last month.
Spanish Unemployment Change 35.3k vs 36.8k last month.
Italian Preliminary GDP q/q -2.0% vs 15.9% last quarter.
EUR Preliminary Flash GDP q/q -0.9% vs 12.5% last quarter.
US IBD/TIPP Economic Optimism 51.0 vs 50.1 last month.
NZD Employment Change q/q 9:45 AM
NZD Unemployment rate 9:45 AM
CNY Caixin Services PMI 1:45 AM