Morning Report

28 July 2021

“With bets on other safe-haven currencies continuing, the dollar growth has taken a pause after a fall in real yields and amid caution from market participants who will be watching the lips of Jerome Powell closely when the Federal Open Market Committee Federal Reserve meeting ends.”

Sam Cornford, Partner & Head of Trading

Main Headlines

The Federal Open Market Committee is all but certain to hold interest rates near zero at the conclusion of a two-day policy meeting today and to re-iterate the pledge to buying bonds at the current $120 billion monthly pace. No forecasts are scheduled to be released at this meeting. The yield on the 10-year Treasury note has fallen since the Fed last met in mid-June, along with market measures of inflation expectations, as the perceived threat of the delta variant to worldwide growth has vexed investors. Such market moves have further enhanced the case for delaying any exit from stimulus at present.

The UK government is set to allow fully vaccinated tourists from the EU and US to travel to England from next week, in a move aimed to bring relief to the country’s leisure sector. A group of senior ministers led by Rishi Sunak, spearheaded the approach that it was now safe to start readmitting foreign tourists who had been fully vaccinated, amid concerns that London and the UK’s tourism sector would lose out to Rome and Paris who are admitting US travellers. The UK’s decision follows President Biden’s choice to impose a travel ban on foreigners from the EU, US and China amid rising cases in the United States.


Sterling is lower against the dollar and higher against the euro overnight. Boris Johnson warned against complacency and urged caution on Covid-19 stating the UK is “not out of the woods yet” despite daily cases falling to 23,511 on Tuesday. The US Defence Secretary, Lloyd Austin expressed concerns that the UK making progress and forays into the Indo-Pacific is “unhelpful”, stating that allies were of more use closer to home. US concerns centre of balancing scarce military resources between allies, rather than overloading the Far East. The HMS Queen Elizabeth passed through the Strait of Malacca into the South China Sea on Tuesday to conduct freedom of navigation operations.


The euro is lower against most majors in early morning trade. The EU retreated from its threat of imminent legal action against the U.K. over London’s breaches of the Northern Ireland protocol. An EU spokesperson said the pause comes as the two try to work through their differences. Instead of the bloc filing a so-called reasoned opinion this month, the two sides will talk through the summer to try to find solutions. The German liberal party, the FDP, are eyeing a role in the Reichstag after their electoral prospectus appear to be on the up in polling. The FDP’s leader Christian Linder is polling at 13%, up from 5% a year ago after unveiling himself as a legitimate candidate for finance minister built on a platform of fiscal prudence and private investment.


The dollar is well-bid against most majors overnight. The US Congress reimposed a mask-wearing requirement for lawmakers and all others while they are on the House floor due to a recent surge in Delta variant cases across the country. The Centre for Disease Control advised vaccinated people to still wear masks in public spaces and on transport in the US. Former President Donald Trump’s top allies could face subpoenas in a House committee’s investigation into the January 6 insurrection at the US Capitol, as the nascent panel considers how best to flex its oversight muscle.


Asian stocks declined Wednesday as a rout in China and a mixed response to major U.S. technology earnings spurred caution. Treasuries held a climb ahead of the Federal Reserve’s policy decision. MSCI Inc.’s Asia-Pacific equity gauge retreated to the lowest level since December. China fell further and Hong Kong swung between gains and losses amid this week’s plunge on a regulatory crackdown by Beijing that’s stirred questions about how far officials will go to curb big companies. The Hang Seng Index is nearing a bear market, despite Chinese state media’s efforts to reassure investors. U.S. contracts fluctuated following the tech-heavy Nasdaq 100’s biggest decline in more than two months, with the S&P 500 also lower. While earnings have bolstered U.S. shares, results from Apple Inc., Microsoft Corp. and Alphabet Inc. got a mixed response: Apple fell in extended trading amid concern over slower growth, while Alphabet rose on Google’s strong sales.

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

8:00 a.m.: U.K. July nationwide house prices

8:00 a.m.: Norway June retail sales

8:00 a.m.: Germany Aug. GfK consumer confidence

8:45 a.m.: France July consumer confidence

9:30 a.m.: Sweden June retail sales

10:00 a.m.: Bank Austria July manufacturing PMI

10:00 a.m.: Italy July consumer confidence index

10:00 a.m.: Switzerland July Credit Suisse survey expectations

11:00 a.m.: Italy to sell 7 billion euros of bills

11:00 a.m.: Greece to sell 625 million euros of 182-day bills

11:30 a.m.: Germany to sell 2.5 billion euros of bonds

12:00 p.m.: Ireland June retail sales

4:30 p.m.: EIA U.S. Oil Inventories

8:00 p.m.: Fed rate decision; Powell holds press conference afterward

Corporate Events

Earnings include Rio Tinto, GlaxoSmithKline, British American Tobacco, BASF, Equinor, Facebook, Barclays, Pfizer, Thermo Fisher Scientific, Shopify


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