August 24, 2021

“The dollar was smarting today, following its sharpest one-day fall since May. Traders were wary of chasing the mood-driven move lower ahead of a Federal Reserve symposium that could map out an end to stimulus and asset purchases.”

Tim Hallinan, Trading Director

Main Headlines

President Biden urged employers to require workers to get vaccinated against Covid-19 after the Food and Drug Administration granted full approval to the BioNTech/Pfizer jab. “If you’re a business leader, a non-profit leader, the state and local leader, who has been waiting for full FDA approval to require vaccinations, I’m calling on you now to do that, require it,” the President said in a statement from the White House on Monday. The FDA’s decision made the two-dose mRNA jab, which will be sold under the brand name Comirnaty, the first Covid vaccine to receive full approval for use in people aged over 16.

The UK government is to grant a major concession to British business by prolonging the deadline for companies to adopt a new “UKCA” safety and quality mark for their goods after Brexit. The one-year extension for UK products to continue using the EU’s “CE” safety mark came after businesses warned that they would not be ready for the planned post-Brexit shift away from EU certification at the end of 2021. The government climbdown will give vital breathing space for UK manufacturers, which had warned over risks to the British supply chain if they could no longer use products made overseas.

GBP

The pound is higher versus most majors overnight. Lord Ian Botham, one of England’s greatest former cricketers, has been tasked by Boris Johnson to lead a trade mission to Australia in his new role as a UK government envoy. Botham, famed for his bruising battles with the Australian cricket team, will head a delegation that includes law firms, carmakers and whisky distillers when Covid restrictions are lifted. Johnson is an admirer of Botham, who supported Brexit, and appointed him to the House of Lords in 2020 as a crossbench, or non-party, peer. Liz Truss, international trade secretary, tweeted that Botham would “bat for UK business down under”; she is expected to brief the former cricketer on his new role in the coming weeks.

EUR

The euro is weaker than most majors this morning. Extreme rainfall such as that behind last month’s devastating floods in Germany and Belgium will become more frequent and increasingly intense as climate change warms the planet, according to a study of the disaster by leading meteorologists. Research by the World Weather Attribution initiative, an international group of experts, said the unprecedented rain that led to the deaths of more than 200 people in Germany and Belgium was between 1.2 and nine times more likely to happen today, compared with pre-industrial times. The effects of human-driven climate change have become increasingly apparent. Europe recorded its hottest ever temperature this month when it reached 48.8C in Italy, wildfires tore across the Mediterranean region from Turkey to Spain, and floods wreaked havoc in parts of northern Europe.

USD

The dollar is stronger than the euro but weaker than the pound in the early morning trade. Shares in gig economy groups rose yesterday after companies including Uber expressed confidence that they would succeed in overturning a California judge’s ruling that legislation classifying workers as independent contractors was “unconstitutional”. Last Friday, a superior court judge in Alameda County said Proposition 22, which allows gig workers to remain independent contractors, was “unenforceable” under state law. The judge said the ruling would not take effect while gig economy workers and others, including California’s attorney-general, pursued an appeal. The share prices of Uber and rival Lyft fell in the immediate aftermath of the decision.

Markets

Asian stocks rose along with U.S. and European equity futures Tuesday on optimism over the U.S. vaccination drive and ongoing economic support from central banks. Treasuries dipped and the dollar held a drop. An Asia-Pacific share gauge was set for the best two-day climb since February, helped by a rebound in Chinese technology stocks. JD.com Inc. soared after the e-commerce giant’s results weathered Beijing’s regulatory clampdown. A vow from China’s central bank to boost credit support aided sentiment. U.S. and European equity futures edged up after American stocks extended a rebound on full approval for the Pfizer Inc.-BioNTech SE shot. The move proved to be a fillip for the reflation trade as it raises the prospect of more vaccine mandates to underpin economic reopening. Gold was at $1,803.47 an ounce, down 0.1%.

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

7:00 a.m.: Finland July Unemployment

8:00 a.m.: Germany 2Q F GDP

11:00 a.m.: U.K. to sell bonds

11:00 a.m.: Hungary to sell bills

11:15 a.m.: Switzerland to sell bills

11:15 a.m.: Austria to sell bills

11:30 a.m.: Germany to sell bonds

2:00 p.m.: Hungary Central Bank Rate Decision

Corporate Events

Earnings include Medtronic, Intuit, L E Lundbergforetagen, Pinduoduo, Anta Sports, JD Health, CTS Eventim