MNI US Open: Pound Gains Ground On Euro

EXECUTIVE SUMMARY:

• ITALIAN PRIME MINISTER DRAGHI TO FACE LAST VOTE OF CONFIDENCE TODAY
• VIRUS SPREAD IN ENGLAND FALLS SHARPLY AHEAD OF PM JOHNSON REVIEW
• ROBINHOOD, CITADEL FIGHT CONSPIRACIES AHEAD OF GAMESTOP GRILLING TODAY
• BIG FREEZE IN TEXAS IS BECOMING A GLOBAL OIL MARKET CRISIS (BBG)
• HUAWEI TO MORE THAN HALVE SMARTPHONE OUTPUT IN 2021

Fig.1: One Way Traffic In Sterling's Favor Since Mid-December

BBG, MNI

NEWS:

ITALY (DPA): Italian Prime Minister Mario Draghi will face a vote on confidence in the lower house of parliament on Thursday, the last hurdle for the country's new government inaugurated on Saturday. Draghi has already won a clear majority in the Senate - late Wednesday night, 262 of the chamber's 304 voting members voted in favour of the government, while 40 voted against. Thursday's session is scheduled to start in the larger of the two parliamentary chambers at 9 am (0800 GMT), according to a statement. The vote of confidence for Draghi and his cabinet is to take place in the evening after several hours of debate. Observers expect that the former European Central Bank (ECB) chief will garner a solid majority.

UK (BBG): Coronavirus infections in England have fallen "significantly" in recent weeks, a boost to U.K. Prime Minister Boris Johnson as he weighs how quickly to re-open Britain's economy. National prevalence of the virus was down by two-thirds in the first half of February compared to January, according to a survey by Imperial College London and Ipsos Mori, one of the country's largest coronavirus studies. The number of infected people fell to 51 per 10,000 at the time of the latest survey in February, down from 157 per 10,000 in January.

US (BBG): Robinhood Markets and Citadel, central players in the GameStop Corp. saga that riveted markets last month, plan to deliver a unified message to U.S. lawmakers Thursday: conspiracies swirling in Washington that they worked together to harm retail investors are categorically false. Robinhood Chief Executive Officer Vlad Tenev, whose firm has faced a barrage of questions into whether hedge funds such as Citadel ordered it to prevent customers from adding to their GameStop bets, called such claims "market-distorting rhetoric." Robinhood halted trades due to demands from its clearinghouse that it post more capital to deal with increased risk, he said in written testimony for a hearing before the House Financial Services Committee. Ken Griffin, Citadel's billionaire founder, said in his prepared remarks that he learned Robinhood had barred GameStop buy orders after the restrictions were publicly announced.

HUAWEI (NIKKEI): Huawei Technologies has notified its suppliers that its smartphone component orders will fall by more than 60% this year, Nikkei has learned, as U.S. sanctions continue to bite. Huawei has notified suppliers that it plans to order enough components for 70 million to 80 million smartphones this year, according to people at multiple suppliers. The range represents more than a 60% decline from the 189 million smartphones Huawei shipped last year. The company's component orders have been limited to those for 4G models as it lacks U.S. government permission to import components for 5G models.

ENERGY (BBG): What began as a power issue for a handful of U.S. states is rippling into a shock for the world's oil market.More than 4 million barrels a day of output -- almost 40% of the nation's crude production -- is now offline, according to traders and executives. One of the world's biggest oil refining centers has seen output drastically cut back. The waterways that help U.S. oil flow to the rest of the world have been disrupted for much of the week. Brent crude surged above $65 a barrel on Thursday, a level not seen since last January. Spreads indicating supply tightness also soared.

AIRLINES/COVID (BBG): Air France-KLM is poised to get a fresh government bailout after burning through 2.1 billion euros ($2.5 billion) in the final quarter of last year as a resurgent Covid-19 pandemic delayed any recovery in air travel.Talks are ongoing between the carrier's biggest shareholders, the French and Dutch governments, and the European Commission about a rescue package, according to Chief Financial Officer Frederic Gagey. Air France-KLM reported Thursday it had 9.8 billion euros of liquidity and credit lines at its disposal at the end of 2020 compared with 12.4 billion euros three months earlier.

RUSSIA/COVID (RTRS): Russia plans to register CoviVac, its third COVID-19 vaccine, on Feb. 20, the Interfax news agency reported on Thursday, citing a government website about the coronavirus.

EU: The European Medicines Agency has published its full overview of the authorisation provided for the AstraZeneca/Oxford University Vaccine. A major row erupted in January when an article in the German paper Handelsblatt (incorrectly) claimed that according to a senior gov't source the AZ vaccine was only 8% effective on older age groups. Following this, French President Emmanuel Macron also raised doubts publicly about the efficacy of the vaccine, and several member state health bodies have officially recommended the vaccine is not given to those in older age groups. Today's publication from the EMA confirms its previous view that, "Most of the participants in these studies were between 18 and 55 years old. There were not enough results in older participants (over 55 years old) to provide a figure for how well the vaccine will work in this group. However, protection is expected, given that an immune response is seen in this age group and based on experience with other vaccines; as there is reliable information on safety in this population, EMA's scientific experts considered that the vaccine can be used in older adults."

GERMANY: Debt levels of the German federal states will return to the pre-pandemic levels with 5 to 10 years if the recovery is as expected, a senior researcher at the Ifo Institute said Thursday. Pointing to debt levels as a percentage of regional GDP and not an absolute level, Remo Nitschke said the key consideration will be growth over repayment. "As economic output rises over the coming years, the proportion of debt will fall." he said.

BOJ: Bank of Japan officials believe accumulated debts of firms in the accommodation and hospitality sectors of the Japanese economy will peak around current levels, although they see many still facing tough financing conditions ahead and there remains a risk of a degree of financial instability even as the economy recovers, MNI understands. Officials will continue to monitor the situation ahead of the 6-monthly Financial System Report in mid-April. In the October report, the BOJ judged that businesses had the necessary liquidity to get through the current fiscal year, helped by the BOJ and the government funding measures, and the focus is shifting to how credit costs and stability of financial system will evolve into fiscal 2021.

INDONESIA: Bank Indonesia cut its benchmark rate by 25 basis points and revised growth expectations lower at its monthly meeting held Thursday, in line with the expectations of the MNI State of Play The 25 bps cut in the 7-day reverse repo rate to 3.5% added to the 125 basis points of cuts seen over 2020. The bank last cut rates in November. The deposit facility rate was also cut by 25bps, which is now at 2.75%. as was the lending facility rate, which is now 4.25%. Bank Indonesia also revised its GDP forecast tow between 4.3% and 5.3% for 2021, down from the previous range of 4.8% to 5.8%.

DATA:

No key data in the European morning session.

LOOK AHEAD: