Morning Report

August 22, 2023

“UK’s July budget deficit came in lower than expected, boosting hope for potential tax cuts later this year. The ECB’s recent Current Account release at 35.8Bn highlights strong demand for the Euro. Traders will closely watch speeches by several Fed members this evening ahead of Jackson Hole later this week.”

Tim Hallinan – Trading Director

Main Headlines

Over 50% of American small business owners perceive the economy as being in a recession, a slight decline from April to July. Despite this, the majority of businesses view their own financial state positively. The National Federation of Independent Business survey, centred on banking perceptions and credit requirements, also highlighted reduced concerns about banks’ health compared to the aftermath of recent bank failures, including Silicon Valley Bank. In other news, A Washington DC court has ruled that artworks produced solely by artificial intelligence lack copyright protection under US law. Judge Howell agreed with the Copyright Office and said human authorship is a “bedrock requirement of copyright” based on “centuries of settled understanding.”

UK’s July budget deficit came in lower than expected, boosting Finance Minister Jeremy Hunt’s hope for potential tax cuts this year ahead of the 2024 election. However, economists warn that ongoing Bank of England interest rate hikes to combat inflation could hinder their pre-election plans due to potential economic downturn, with net borrowing standing at 4.3 billion pounds last month. In other news, post-Brexit easing of work visa regulations for non-EU nationals shows the UK experienced a notable increase in job searches from abroad over the past year. According to data from Indeed, a record 5.5% of searches for UK jobs on their website in June originated from international candidates, up from the 2017-2019 average of 3.6%.


Sterling is well bid against most major currencies overnight. Earlier today the Office for National Statistics released the Public Sector net borrowing report, which measures public spending disparities. The actual figure came in at 3.5Bn against the 3.8bn forecast, which is the lowest reading since February 23. Later today the CBI will be releasing the Industry Trends Survey of around 550 manufacturers on their anticipated order volumes. The current forecast is at -11, however recent reporting has shown a trend of steadily rising volumes.


The Euro has given up its earlier gains to the Dollar and is weaker against Sterling this morning. Earlier, the ECB released their Current Account reporting, which measures the value discrepancies between imports, exports, and services. The forecast was set at 10.2Bn, however the actual soundly beat expectations by 25.6Bn to a total of 35.8Bn, which shows the Euro is currently seeing a very high demand.


The Dollar has rebounded from this morning’s lows but is still slightly weaker than most major currencies. Later today the National Association of Realtors will release their Existing Home Sales report which measures the number of residential buildings that were sold during the previous month. The current forecast is sat at 4.15m, however previous months reporting has shown an increasing decline, so we will see how this trend progresses. There are also a number of Federal Open Market Committee members speaking this evening at the Chicago Fed, so expect some volatility as these events are often used to drop subtle clues regarding future monetary policy.


Nasdaq futures signalled further gains in US tech shares after Monday’s rally, while the sector also outperformed in Europe and Asia. Contracts on U.S. stock gauges rose, with those on the Nasdaq 100 Index rising 0.4%. The tech-heavy benchmark surged 1.7% on Monday as Nvidia Corp. jumped amid optimism about its earnings due this week. Treasuries steadied, pausing a selloff that had driven benchmark yields to 16-year highs. A late surge in Chinese shares boosted sentiment in Asia, with key mainland equity indexes rebounding from oversold levels. In Europe, tech led the advance and miners outperformed amid a fourth day of gains for iron ore.

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

10:00 p.m.: Euro-area June ECB Current Account
10:00 p.m.: Poland July Retail Sales
12:00 p.m.: UK Aug. CBI Trends Total Orders
France July Retail Sales
BRICS summit in Johannesburg, through Aug. 24
Xi Jinping to meet South African President Cyril Ramaphosa

Corporate Events

Earnings include Medtronic, Lowe’s, Baidu, Dick’s Sporting


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