Tough times ahead

Today’s news headlines:

‘Rising Euro stokes ECB worries over falling prices'. The Euro’s recent rise to its strongest in around two years has worried policymakers at the European Central Bank that they could be called upon for additional monetary stimulus. If the single currency keeps appreciating, it will weigh on exports and drag down prices in an already weak global demand environment. The Euro’s move has been driven by the US Federal Reserve’s dovish shift, adding pressure on ECB policymakers to respond with its own policy review, scheduled to finish next year. (Financial Times)

‘Johnson warns UK’s economic health set to worsen’. After Chancellor Rishi Sunak admitted taxes would have to rise in order to pay for the economic damage of the coronavirus pandemic, Prime Minister Boris Johnson warned that the economic outlook was ‘about to get tougher’. The British leader also pledged that he would continue to tackle regional inequality, while Sunak pleaded with MPs to trust him as he tries to correct the UK’s public finances. Meanwhile, BoE Governor Bailey told the Treasury Select Committee that the UK economy would be 1.5% smaller in the long-run because of the pandemic. (Financial Times)

Today's events, rates, and data 

  • The recent rise in global stocks showed no signs of abating with US equities setting a fresh all-time high. Asian stocks followed suit and European equity futures were in the green on signs that gains were broadening across sectors. In currencies, comments of concern from the ECB led to a sell-off for the Euro and a 1.3% rise for the Dollar above the 28-month low it hit on Tuesday.

Today's events

China Caixin Services PMI: 54.0 vs 54.1 previously
Eurozone Final Services PMI: 9.00am
UK Final Services PMI: 9.30am
Canada Trade Balance: 1.30pm
US Weekly Jobless Claims: 1.30pm
UK BoE Governor Bailey Speaks: 3.00pm
US ISM Non-Manufacturing PMI: 3.00pm

Interbank rates:

GBP/USD: 1.3280
GBP/EUR: 1.1260
EUR/USD: 1.1795
USD/CAD: 1.3090