30 June 2021

“The dollar is maintaining its position ahead of Friday’s jobs report – as wage pressure could further influence the Fed’s policy outlook, which has seen recent changes. September German elections will be key for charting the path of the euro, since a success for the Greens could result in an increased commitment to the EU stimulus.”

Sam Cornford, Partner & Head of Trading

Main Headlines

The Biden administration is developing an executive order directed at strengthening oversight of industries that are dominated by a small number of companies. The executive order, which President Biden could sign as soon as next week, would constitute a wide-ranging attempt to rein in big business power across the economy, directing regulators of industries from airlines to agriculture to rethink their rule-making process, inject more competition and give consumers, workers and suppliers more rights to challenge large producers.

The new Subsidy Control Bill introduced to parliament Wednesday will see Britain build its own subsidy regime. The Government is proposing a simpler, more “nimble” post-Brexit system of state subsidies which would be used to turbo-charge or prop up selected industries. The issue of a “level playing field” and state subsidies was the last major sticking point up to the end of Brexit trade deal negotiations last year. The government said the new UK system would “start from the basis that subsidies are permitted if they follow UK-wide principles — delivering good value for the British taxpayer while being awarded in a timely and effective way”.

GBP

Sterling is weaker against most other majors this morning. Chancellor Rishi Sunak is expected to announce a £15bn green savings scheme this week, in which green savings bonds will be issued, allowing people to invest in renewable energy projects. At a speech at Mansion House, Sunak is set to reveal full details of the scheme and it will form part of the Government’s wider efforts to enhance its environmental policies ahead of the Cop26 climate conference in November. Meanwhile, Education Secretary Gavin Williamson is under pressure to ease coronavirus classroom restrictions after the number of pupils self-isolating at home quadrupled in a fortnight.

EUR

The euro is stronger against the dollar and unchanged against the pound overnight. The EU’s justice commissioner, Didier Reynders, has pledged to protect the supremacy of EU law after warning that increased legal challenges and rulings by members states could have a “spillover effect” which threatens the union. Meanwhile, Italy’s co-ruling 5-star movement was thrown into turmoil late yesterday after its founder, Beppe Grillo, clashed with former Prime Minister Giuseppe Conte, accusing him of lacking “political vision” or a “talent for innovation”.

USD

The dollar is higher against most major currencies in the early morning trade. According to the S&P Case-Shiller national home price index, US home price growth accelerated rapidly in April, at the fastest pace in over 3 decades amid strong demand against a shortage of residential properties. Elsewhere, the New York mayoral race was thrown into disarray yesterday evening after the city’s board of election withdrew primary results, admitting it had included over 130,000 test ballots in its latest tally.

Markets

Asian stocks and U.S. futures were steady Wednesday after Wall Street inched up to a record as traders weighed economic optimism against risks from a highly infectious coronavirus strain.

Australian equities shrugged off lockdowns targeting the delta variant to climb modestly, while Japan and Hong Kong dipped, though the moves were small. U.S. contracts fluctuated while European futures fell. Overnight, the S&P 500 eked out a gain, remaining on track for a fifth monthly advance. Moderna Inc. hit an all-time peak after saying its vaccine produced protective antibodies against the delta strain, which has spread around the world. Treasury yields were steady as traders digested the latest Fed comments. Oil climbed back above $73 a barrel

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

8:00 a.m.: U.K. 1Q GDP, current account

8:45 a.m.: France May PPI, consumer spending; June CPI

9:55 a.m.: Germany June unemployment

11:00 a.m.: Euro-Area, Italy June CPI

11:00 a.m.: Italy sells bonds

1:00 p.m.: Russia sells bonds

1:00 p.m.: U.K.’s Haldane speaks

4:30 p.m.: EIA Crude Inventory Report

6:00 p.m.: Russia May unemployment, retail sales

OECD meets to finalize global tax proposal

UN gender equality summit

Corporate Events

Earnings include Dixons Carphone, Micron, Constellation Brands, General Mills

ConocoPhillips investor meeting