28 June 2021

“The dollar has recovered from a brief trough amid Friday’s inflation readings. This week, manufacturing ISM and non-farm payroll data will show whether strong growth momentum continued in May – further evidence of improvement in the economy could push up the US interest rates and the dollar.”

Sam Cornford, Partner & Head of Trading

Main Headlines

The US has launched air strikes on facilities of two Iran-backed militia groups on the border between Syria and Iraq, just over a week after the landslide election victory of hardliner Ebrahim Raisi as Iranian president. The Pentagon said operational and weapons-storage facilities had been struck at three locations that it said had been used by militia groups. The move marks the second such US attack on Iran-backed militia in Syria since Biden took office, with the first having occurred in February with a strike on facilities in the country’s east that left more than 20 fighters dead.

HM Revenue & Customs has launched almost 13,000 investigations into use of the government’s coronavirus business support schemes, including for possible fraud and other breaches of rules. Law firm BLM uncovered the data as part of a freedom of information request, finding that the number of investigations that make use of the government’s furlough scheme, the self employment income support scheme, and the ‘eat out to help out’ meal subsidy measure could rise sharply in coming years. HMRC has criminal investigatory powers, similar to other UK law enforcement agencies, including the ability to make arrests.

GBP

Sterling is stronger against most major currencies this morning. Crypto exchange Binance Markets Ltd. was banned by the UK’s financial watchdog from doing any regulated business in the country, one of the most significant moves to date by a regulator amid a global crackdown in the crypto industry. New health secretary Sajid Javid on Sunday said he wants England to return to normal life “as quickly as possible”. While Javid’s predecessor Hancock took a cautious approach to reopening the economy, Javid has long argued that coronavirus restrictions have blighted young lives and contributed to mental health problems.

EUR

The euro is lower against most other majors overnight. Centre-right and leftwing politicians won convincing victories in the final round of France’s regional elections on Sunday, brushing off an attempt by Marine Le Pen’s far-right Rassemblement National to win its first region and confirming the weakness of President Emmanuel Macron’s governing party La République en Marche. Malta has become the first EU country to be placed on an international “grey list” by anti-money laundering watchdog the Financial Action Task Force.

USD

The dollar is lower versus the pound and higher against the euro in the early morning trade. Donald Trump held his first rally since leaving the White House on Saturday night, addressing thousands of supporters in a speech in Wellington, north-east Ohio. The former US president called the event the “very first rally of the 2022 election”. Elsewhere, Republican senators said President Biden’s reassurance that he isn’t linking a bipartisan infrastructure plan to a larger tax and spending bill – despite his comments hinting at that last week – will allow negotiations to move forward.

Markets

Asia stocks and U.S. futures were subdued Monday with investors weighing the pace of economic recovery against more potent Covid-19 strains and central banks mulling stimulus reductions. Southeast Asian markets underperformed, led by Malaysia, where a nationwide lockdown was extended. Australia was little changed despite a lockdown in Sydney to contain outbreaks of the highly contagious Delta strain. Japan fluctuated. Hong Kong dipped in a trading session delayed by a rain storm warning. European futures were little changed. The S&P 500 had its best week since February. Treasuries held losses. Bitcoin rose for a second day, trading in the mid-$30,000s range in Asia on Monday.

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

8:00 a.m.: Germany May Import Price Index

10:00 a.m.: ECB’s de Cos speaks

10:15 a.m.: ECB’s Panetta speaks

11:00 a.m.: Italy sells bills

11:30 a.m.: Germany sells bills

12:05 p.m.: ECB’s Stournaras, Scicluna in panel

1:30 p.m.: ECB’s de Cos speaks

2:00 p.m.: BOE’s Haldane speaks

2:00 p.m.: ECB’s Weidmann speaks

2:50 p.m.: France sells bills

5:00 p.m.: ECB’s Guindos speaks

European Commission publishes summer economic forecasts

Global Coalition to Defeat ISIS foreign ministers meet

G-20 foreign ministers meet

Israel’s Rivlin meets with U.S.’s Biden

Frankfurt Euro Finance Summit

Deadline for Swedish PM to form new government

EU’s Agriculture and Fisheries Council meets

U.S. Navy hosts Exercise Sea Breeze with Ukraine, in the Black Sea

Corporate Events

Decision expected in UBS appeal against 4.5 billion-euro 2019 fine

Final index list for the Russell 1000 and 2000 is published

GSMA MWC 2021 mobile congress in Barcelona

Earnings include L’Occitane

Credit Suisse hosts Sustainability Week

To learn more about Ballinger & Co., please visit our website or our LinkedIn and Twitter pages.