Morning Report

July 5, 2021

“Last week brought mixed signals to market participants, as job creation figure exceeded expectations, while unemployment increased and workforce participation stayed flat. This will likely deter the Fed from making more tapering announcements, and the dollar is left to fluctuate around the same values. The greenback has been particularly sensitive to domestic data since the Fed’s hawkish announcement in June.”

Sam Cornford, Partner & Head of Trading

Main Headlines

In a July 4 celebratory speech at the White House, President Biden declared that the United States is “closer than ever to declaring our independence from a deadly virus” but emphasized the importance of vaccinations, the target for which his government did not meet. For months leading up to American Independence Day, Biden cited it as a moment when Americans could see a return to some form of normality. The White House recently acknowledged that the U.S. wouldn’t reach the president’s goal of getting at least one coronavirus vaccine dose to 70% of the adult population by July 4.

Boris Johnson will on Monday set out the end to an array of strict Covid-19 measures from July 19 including the enforced wearing of face coverings, working from home guidance and the social distancing rules. Johnson is expected to end restrictions on mass gatherings and reopen nightclubs and theatres, bringing relief to those hard-pressed sectors. Meanwhile, ministers are discussing proposals so that children are not forced to self-isolate at home if others in their “school bubble” get a positive test. Instead, schools would insist on regular testing for pupils under the proposals being discussed.


Sterling is stronger against most major currencies this morning. Margaret Hodge, chair of the all parliamentary committee group on anti-corruption and responsible tax, has called for new legislation to compel companies profiting from public contracts to publish accounts in the wake of procurement scandals during the pandemic. Wm Morrison Supermarkets agreed to a takeover for about 6.3 billion pounds from a consortium led by Fortress Investment Group after turning down a lower bid from Clayton Dubilier & Rice in June. Private equity group Apollo is examining a potential counterbid.


The euro is lower versus most majors overnight. EU foreign ministers will this month push for more tangible progress of the union’s “connectivity initiative”, following the G7 pledge to create infrastructure partnership that could contribute to the estimated $40tn needed by developing nations by 2035. ECB official Isabel Schnabel said it’s “necessary and proportionate” that the inflation overshoots the central bank’s goal for a while as the economy recovers. But some of her colleagues have called for stimulus to end around March. The comments come as the ECB prepares for a special meeting this week to debate changing its price-stability strategy.


The dollar is lower against the pound and unchanged against the euro in the early morning trade. The US has left its main military base in Afghanistan, part of an accelerated withdrawal that has led to a resurgent Taliban gaining territory and concerns that the country could descend into chaos. Friday’s data showed that new jobs at restaurants, hotels, stores, salons and similar in-person roles accounted for about half of all payroll gains in June. Workers in those industries are also seeing larger raises than other employees.


European and U.S. equity futures slipped Monday and Asian stocks were steady as investors mulled the outlook for Federal Reserve stimulus support and OPEC+ tension over oil. Shares dipped in Japan and Hong Kong and fluctuated in China, where cybersecurity probes into ride-hailing giant Didi Global Inc. as well as some other online platforms highlighted Beijing’s push to curb the influence of the nation’s internet companies. Chinese technology firms fell in Hong Kong. The S&P 500 reached a record for a seventh day Friday. U.S. and European equity contracts edged down. Oil was around $75 a barrel amid an OPEC+ dispute. The standoff between Saudi Arabia and the United Arab Emirates leaves the global economy guessing how much oil it will get next month.

Main Economic Data/Central Banks/Government (All Times CET)

9:00 a.m.: Turkey June CPI
9:15 a.m.: Spain June Services, Composite PMI
9:45 a.m.: Italy June Services, Composite PMI
9:50 a.m.: France June Services, Composite PMI
9:55 a.m.: Germany June Services, Composite PMI
10:00 a.m.: Euro-Area June Services, Composite PMI
10:30 a.m.: U.K. June Services, Composite PMI
11:30 a.m.: Germany sells bills
2:50 p.m.: France sells bills
3:00 p.m.: Israel Rate Decision
7:00 p.m.: ECB’s de Guindos speaks
U.S. markets closed for holiday

Corporate Events

Andy Jassy takes over from Jeff Bezos as Amazon CEO

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