Morning Report

August 20, 2021

“The dollar hit a fresh nine and a half month high, whilst other major peers remain buoyed by uncertainty due to the Delta variant impacting on economic recovery in Britain and Europe. A fall in debt purchases by the Fed is widely considered positive for the dollar’s trajectory, whilst rising US Delta variant cases has failed to knock the dollar’s strong performance.”

Tim Hallinan, Trading Director

Main Headlines

In the United States, jobless claims fell to a new pandemic low last week, suggesting the labour market continues to heal even as the Delta variant causes uncertainty across the US economy. First-time applications for benefits, which give an indicator of the number of people laid off from work, fell by 29,000 to a seasonally adjusted 348,000 in the week ended Aug. 14, according to the US Labor Department. That was the lowest level of claims since the pandemic took hold in the U.S. in March 2020. This comes amongst data that the labour market is strengthening with 943,000 jobs added in July, the strongest gain in jobs figures for 11 months.

Retail sales in the UK dropped unexpectedly falling by 2.5% from June to July, according to data from the Office for National Statistics. The ONS cites this comes amid consumers spending less money on groceries and in shops and more in the hospitality sector in restaurants, bars and pubs. This figure was much weaker than the 0.4% expansion in retail sales forecast by Reuters. Food store sales volumes fell by 1.5% last month, whilst non-food stores reported a 4.4% decline. In addition, automotive fuel sales volumes slid by 2.9%, due to high rainfall across the month preventing travel for many UK residents.


Sterling is lower against all majors in early morning trade. UK public finances performed better last month than official forecasts expected, with public sector net borrowing slashed to £10.4bn, roughly half the figure in July 2021. A UK Covid-19 vaccine booster scheme is likely to start in September, according to Sajid Javid. The government’s Joint Committee on Vaccination and Immunisation’ states the ‘most vulnerable’ will receive a third dose of the mRNA vaccine suggesting 30 million ‘vulnerable’ citizens will receive it. Opposition MPs are urging Boris Johnson to sack Foreign Secretary Dominic Raab for his handling of the crisis in Afghanistan.


The euro is well bid against most majors overnight. EU reserves of natural gas are dwindling at an all-time low ahead of the Autumn and Winter, driving European demand for Liquefied Natural Gases from Russia. EU storage facilities of natural gas are at 60% capacity, however this figure will need to reach 80% by October 1st to avoid market shock and price gauging. Temperatures hit a devastating 48.8 Celsius across the Mediterranean, stoking wildfires which continue across Turkey, Greece, Italy, Morocco and Algeria. As winds drop across the Mediterranean, firefighters in France and Italy are hopefully that it will be possible to control the blazes.


The dollar is lower against the euro and higher against sterling in early morning trade. Economists at Goldman Sachs have cut their forecast for US economic growth by more than 50%, predicting a 5.5% expansion in Gross Domestic Product due to fears caused by the Delta variant. Washington’s decision to withdraw 2,500 US troops from Afghanistan has revealed a split in UK-US, following the government’s public and private statements that it did not agree with the end of August withdrawal date. Two US officials working in Germany have sought medical treatment for ‘Havana syndrome’, caused by radiofrequency attacks on the US embassy.


Asian stocks fell Friday as the fast-spreading delta virus strain stoked concerns about economic growth and China’s regulatory curbs hurt sentiment. The dollar was firm, and commodities trimmed a weekly drop. MSCI Inc.’s Asia-Pacific gauge was at the lowest since around December. Shares slid in China and Hong Kong was poised for a bear market as Beijing cracks down on private industry. U.S. futures dipped after modest S&P 500 and Nasdaq 100 gains in choppy overnight trading. European contracts fluctuated.

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

8:00 a.m.: U.K. July Retail Sales
8:00 a.m.: Germany July PPI
8:00 a.m.: Norway 2Q GDP
10:00 a.m.: Norges Bank 2Q Expectations Survey
11:00 a.m.: Swedish PM Stefan Lofven’s Summer Speech
12:00 p.m.: U.K. to sell bills
7:00 p.m.: Baker Hughes U.S. Rig Count

Corporate Events

Earnings include Kingspan Group, Maersk Drilling, Seadrill, Deere, Ubiquiti


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