Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

15th January 2021

Category

Macro Commentary

US politics continues to dominate the headlines, particularly Trump’s second impeachment, amid concern of further civil unrest ahead of next week’s presidential inauguration.

Biden has begun setting out his spending plans, including a $2 trillion virus aid package.

In the UK, it remains a battle between virus infection rates versus the vaccine rollout program.

The Bank of England governor this week indicated that negative interest rates are unlikely to be used anytime soon as they continue their impact assessment. The Bank’s next meeting is February 4th.

In Europe, the Italian political crisis is a growing concern with the breakdown of the ruling coalition.

The European Central Bank meets next week, with no change to monetary policy expected.

On the exchanges, sterling continues to benefit from pent up demand following the Brexit agreement, whilst the dollar continues to trade near its lowest levels since mid-2018.

GBP/USD has good buying interest now at 1.3500 but has so far stalled at the significant 1.3700 level.

GBP/EUR continues to find strong support at 1.1000 and is probing its 6-month highs towards the 1.1300 area, which has held firm so far.

GBP/USD – 1-year chart

Week Ahead

Date

Release

Last

Expected*

20/1/21

UK CPI YoY

0.3%

0.5%

20/1/21

UK RPI YoY

0.9%

 n/a

20/1/21

EU CPI YoY

-0.3%

 -0.3%

21/1/21

EU ECB Deposit Facility Rate

-0.50%

-0.50%

22/1/21

UK Retail Sales

2.4%

 4.5%

22/1/21

UK Markit Manufacturing PMI SA

57.5

 53.0

22/1/21

UK Markit/CIPS Services PMI

49.4

 45.5

22/1/21

UK Markit/CIPS Composite PMI

50.4

46.5

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.2120

AUD/USD

0.7745

GBP/USD

1.3670

USD/AED

3.6730

GBP/EUR

1.1275

GBP/AED

5.0200

USD/CHF

0.8890

EUR/AED

4.4525

USD/JPY

103.70

XAU/USD

1851

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6801

+5.29%

S&P

3795

+1.05%

EUROSTOXX

3641

+2.50%

DFM GENERAL INDEX

2702

+7.77%

UK Benchmark Rates

Libor

 

Swap Mid (SONIA) ss((SONIA)

 

3 month

0.03113%

2 year

-0.04%

6 month

0.03950%

3 year

-0.03%

12 month

0.07713%

5 year

+0.04%

View Arbuthnot Latham’s Private and Commercial deposit rates.

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Weekly

Treasury Market Commentary

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