Market movers today
In Italy, Prime Minister Enrico Letta will present his new government’s programme ahead of a confidence vote in the Lower House and Senate. The government should be able to survive the confidence vote even though it only has a slim majority after Berlusconi’s party Forza Italia withdrew its support for the government.
Final German inflation is expected to be unchanged. However, the data is more interesting than usual as details on sub-indices affected by methodological changes are released. These details will give more insight about what to expect for the figure in December.
ECB Vice President Vitor Constancio is scheduled to speak in Frankfurt today and comments about the ECB’s toolbox will again be in focus.
In Sweden, Prospera publishes its quarterly inflation expectations survey which could be a potential market mover ahead of the Riksbank, see more on page 2.
Selected market news
In the US, a bipartisan compromise on a budget deal, which covers the next two fiscal years, has been reached. The deal needs to be approved by Congress and, if it is accepted, it would likely avert a government shutdown in mid- January and at the start of the next fiscal year in October. The top lawmakers on budgetary issues in their respective chambers were optimistic the framework would pass the House and Senate. Republican leaders seemed optimistic about the deal and John Boehner said the agreement represents a positive step forward. On the other hand, Democrats were unhappy that the deal did not extend expiring jobless benefits, but Chris Van Hollen, the top Democrat on the budget committee, said that even though the agreement was not perfect, it was certainly better than no agreement at all. The deal does not increase the US debt limit and new borrowing will have to be approved by Congress early next year.
If the budget deal is approved by the Congress this week, it will remove some uncertainty for Fed in connection with its meeting on 17-18 December, where we believe the Fed is likely to start tapering.
In Europe, the finance ministers set out a banking union framework but the crucial details of sharing bank failure costs was postponed until a meeting next week. The biggest point of friction among member states is details of how the system of rescue funds operates. A key German demand has been rules to impose hits on senior bondholders in failing banks, which will likely ensure a smaller capital gap for rescue funds to cover. In the draft compromise this has been brought forward from 2018 to 2016. Germany conceded slightly and agreed to accept the eventual establishment of a single resolution fund in 10 years’ time, paid for by an industry levy. At the final emergency meeting next Wednesday, the financing details including the issue of what happens should the bank resolution funds be exhausted will be discussed.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
USD/JPY flat-lines below 151.50 after soft Japanese CPI data
USD/JPY stays defensive below 151.50 after the release of a soft Japan's CPI report and mixed Industrial Production and Retail Sales data on Friday. Japanese verbal intervention also weighs on the pair amid the holiday-thinned conditions on Good Friday. US PCE inflation awaited.
AUD/USD buyers lack vigor above 0.6500 amid Good Friday trading lull
AUD/USD is trading listlessly above 0.6500 in the Asian session amid light trading on Good Friday. The Aussie pair shrugs off encouraging comments from China's FX regulator, as price action remains subdued ahead of the US PCE inflation data.
Gold flirts with record highs above $2,230, all eyes on US PCE data
Gold price flirts with record highs around $2,230 during the Asian session on Friday. The uptick of yellow metal is bolstered by the safe-haven flows amidst growing economic concerns and the prospect of interest rate cuts from the US Federal Reserve.
Optimism price could fall as nearly $90 million worth of OP tokens is due flood markets
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Will they won’t they cut rates is the question of Q2?
There has been some significant push back from Fed and Bank of England members around the timing of rate cuts, and the Bank of Japan still haven’t physically intervened in the FX market to stem yen weakness although they are threatening to do so.