Morning Report

Friday 18 June, 2021

“With the possibility of tighter US monitory policy now on the table, major currencies are no longer stuck within range and further volatility can be expected. The euro is just above two-month low against the dollar, after the ECB’s Philip Lane downplayed expectations ahead of September’s policy meeting.”

Sam Cornford, Partner & Senior FX Dealer

Main Headlines

The US government will invest more than $3.2 billion in developing and manufacturing antiviral pills to treat coronavirus. The $3.2 billion investment will be allocated from the $1.9 trillion coronavirus relief package Mr. Biden signed into law in March. In a briefing Thursday, Dr. Fauci said the funding could accelerate clinical trials “already in progress” for some antiviral pills and potentially make some of them available by year’s end. The oral antiviral medicines would be designed to be taken at home and to treat symptoms early in the course of infection.

Retail sales in the UK unexpectedly fell last month for the first time since January as consumers spent more on meals and drinks out and less on grocery shopping. The volume of retail sales fell 1.4 per cent in May compared with the previous month. The decline followed a jump of almost 10 per cent in April, when non-essential shops were allowed to reopen for the first time since early January in most of the country. The largest contribution to the decline came from food stores, where sales volumes fell by 5.7 per cent.


Sterling is weaker against most majors overnight. Chancellor Rishi Sunak has ruled out any further extension of support to businesses under a state-help scheme designed to help businesses weather the economic storm of Covid-19. The Chancellor stated that the original state-help scheme for businesses had been designed generously, accounting for delays to lifting lockdowns, rendering further government support unnecessary. Boris Johnson’s Conservatives lost the Chesham and Amersham by-election, with Liberal Democrat candidate Sarah Green pulling off a landmark victory by a majority of 8,028 votes.


The euro is stronger against the pound and weaker against the dollar in the early morning trade. The European Medicines Agency restated that the Oxford/AstraZeneca is safe for use and its benefits outweigh the risks after an 18-year-old woman died in Italy last week. Mario Draghi’s government quickly banned the Oxford vaccine for people under 60. The EU is deeply concerned that it faces high risks of fraud impacting the €800bn post-pandemic recovery fund because some member states are refusing to sign up to a common transactions database.


The dollar is well-bid against most majors overnight. The US Supreme Court has rejected the latest Republican challenge to the Affordable Care Act (Obamacare) by a 7-2 majority. The Act has provided health care coverage for tens of millions of uninsured Americans, overcoming three Republican challenges in the Supreme Court since its inception. Meanwhile, the premium between corporate debt and US Treasuries has dropped to its lowest level in more than a decade in a sign that investors are growing confident recent rises in inflation will not hinder the economic recovery.


Asian stocks drifted after a rally in U.S. technology shares and Treasuries on Thursday. Commodities steadied after overnight losses. Equities climbed in Hong Kong and Australia and slipped in Japan after a central bank meeting. In China, shares retreated after U.S. regulators proposed a ban on products from Huawei Technologies Co. and four other Chinese electronics companies. U.S. futures edged higher. The S&P 500 ended the U.S. session flat. Treasury yields pared a slide spurred by speculation investors were unwinding bets on a steeper curve, after Federal Reserve officials signalled monetary-policy tightening could start sooner than previously thought. Australian 10-year yields fell.

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

8:00 a.m.: Germany May PPI

8:00 a.m.: U.K. May retail sales

12:00 p.m.: U.K. sells bills

U.K. sovereign debt rated by Fitch

Iran holds presidential election

EU Economic and Financial Affairs Council meets

Corporate Events

Sales include Tesco

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