FX Weekly Insights — 06/12/21
Key Events
Tuesday Consensus/Previous
03:30 (AU) – RBA Interest Rate Decision 0.10% 0.10%
10:00 (EU) – GDP s.a (QoQ, Q3) 2.20% 2.20%
23:50 (JP) – GDP s.a (QoQ, Q3) 0.40% -0.80%
Wednesday
04:30 (IN) – RBI Interest Rate Decision (Repo rate)
15:00 (CA) – BoC Interest Rate Decision/Announcement 0.25% 0.25%
15:00 (US) – JOLTS Job Openings 10.44m
22:00 (AU) – RBA’s Governor Lowe Speech
Thursday
01:30 (CN) – CPI (YoY, Nov) 2.50% 1.50%
19:00 (CA) – BoC’s Grevelle Speech
Friday
(CN) – FDI (YTD, YoY, Nov) 17.8%
07:00 (DE) – Harmonised Consumer Prices(YoY, Nov) 6.00% 6.00%
13:30 (US) – CPI ex Food & Energy (YoY, Nov) 4.90% 4.60%
15:00 (US) – Michigan Consumer Sentiment Index 67.0 67.4.
(YoY, Dec, Preliminary)
Further Points:
-Will the US inflation rate justify a quicker taper from the Fed? "This will give the Fed evidence of how quickly inflation is progressing and whether a faster withdrawal of its monthly purchases of government bonds would be warranted."
-When will the US labour market return to normal? "Workers have been quitting jobs in mass this year most probably because they have better offers elsewhere."
RUB on the Ground
On Friday with the weaker NFP data RUB tested 73.50 lvl but failed to break it and finished the week near 73.80-90 area. Main news on the weekend was agreement of an exact date for a video call between Mr. Putin and Mr. Biden, on 7th December in regard to the Ukraine situation.
Putin wants official guarantees from NATO and the US about his 'red lines' (and mainly about neutrality of Ukraine).
Biden doesn't want any country to dictate anything to the US and in addition he doesn't want the Nord Stream 2 project to be launched.
Our partners prefer to be in a risk defensive position ahead of this video call and expect the RUB in a 73.50-74.50 range till call tomorrow (without any new escalations).
OPEC+ To Continue Supplying Oil
On Friday night, the 1.2$ trillion bipartisan infrastructure bill was passed by Congress, delivering on a foundational pillar of Biden’s agenda after months of deliberation and division among Democrats. Biden has seen his credibility drastically decline since August due to the US’s retreat from Afghanistan, while rising inflation has also applied pressure and fuelled further popular discontent. However, the success of this bill has boosted the credibility of Biden’s presidency. The bill was also approved alongside further good news regarding the pandemic and the economy. The job report for October stated that the unemployment rate fell to 4.6%, and that 500,000 new jobs had been created. Pfizer also announced that its new antiviral pill successfully reduced Covid-19 hospitalisation rates. Together, these three events should participate in rebooting the US’s economy post-pandemic. With major investments in roads, railways, ports and broadband, the bill will also hopefully ease the US’ inflationary pressures and reduce supply bottlenecks. This bill presents an important win for the Biden administration in the run-up for the next congressional elections in 2022. It also creates positive momentum for tackling the next bill, the $1.75tn “Build Back Better” bill. President Biden is hoping to have it passed before Thanksgiving, however it is failing to garner consensus within certain Democrat circles who require further negotiations to establish the details of the bill. Broadly, it contains a package of social programs, new tax policies on high income earners, and $550bn of climate incentives, the largest amount dedicated to climate initiatives in US history.
Chart of the Week - EUR/GBP
Resistance: 0.8552
Support: 0.8486