Morning Report

July 20, 2021

“The greenback has edged higher, making further gains as the demand for safe haven currencies grows in the wake of surging delta variant cases in developed countries. Sterling has continued to fall with market participants increasingly uncertain of a smooth economic recovery.”

Tim Hallinan, Trading Director

Main Headlines

The Biden administration, together with its Western allies, has formally accused the Chinese government of masterminding widespread cyber attacks, including the hack of Microsoft this year, which is estimated to have affected at least 30,000 organisations. The US condemnation of China was supported by NATO and the Justice department unsealed an indictment that alleges Chinese nationals affiliated with the Ministry of State Security has overseen a campaign to infiltrate US companies and government bodies between 2011 and 2018. US Secretary of State Antony Blinken stated that “responsible states” did not “knowingly harbour cyber criminals.”

Prime Minister Boris Johnson has announced that nightclubs and other large venues will be legally required to use Covid passports and ban un-vaccinated customers from the end of September. The new rules mark a significant government U-turn and have prompted a revolt from several ministers and Conservative MPs who fear the creation of a “two-tier” society. Johnson further announced a plan to exempt key workers from self-isolation requirements, which are currently causing economic and social disruption due to the rapid growth in cases.


Sterling is weaker against most other major currencies this morning.  The Treasury Select Committee has condemned former Prime Minister David Cameron’s “significant lack of judgement” for his concerted lobbying on behalf of Greensill Capital. The committee concluded that Cameron did not break lobbying rules but said that the rules ought to be strengthened. The BBC is set to broadcast an interview tonight with former Downing Street Chief of Staff Dominic Cummings, which is expected to strongly criticise Johnson’s handling of the pandemic.


The euro is weaker against the dollar and higher against the pound overnight. Germany and the US are expected to resolve the longstanding dispute over the Nord Stream 2 natural gas pipeline in the coming days, amid concerns that the pipeline will increase Europe’s dependence on Russian gas. The deal would avert a resumption of US sanctions against the company behind the pipeline. Elsewhere, the European Commission is set to criticise Hungary over a number of issues, including the status of a free press, nepotism, and corruption concerns, according to a report into the country’s rule of law that will be published later today


The dollar is stronger against other major currencies in the early morning trade. Biden attempted to soothe fears that rising inflation would undermine the US economic recovery by saying that the administration considered price increases temporary and that he would expect the Federal Reserve to act if required. The President publicised the surge in job creation and growth in his first six months in office. Meanwhile, the State Department and CDC has issued its highest warning against travel to the UK, stating that a surge in cases has put even fully vaccinated travellers at risk of contracting variants.


Asian stocks fell Tuesday. U.S. equity futures climbed and Treasuries were steady. Equities fell in Hong Kong, Japan and China, with cyclicals like energy and industrial stocks among the weakest performers in the Asian retreat. S&P 500 and Nasdaq 100 futures advanced. The S&P 500 fell the most in two months overnight as the reopening trade reversed. European futures climbed. Long-term Treasury rates were steady after spiralling Monday to their lowest since February, flattening the yield curve. Ten-year yields hovered around 1.2%. Brent oil was steady, and Bitcoin fell below the closely watched $30,000 level.

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

8:00 a.m.: Switzerland June Exports

8:00 a.m.: Germany June PPI

9:30 a.m.: ECB’s Villeroy Speaks

10:00 a.m.: ECB May Current Account

11:00 a.m.: U.K. to sell 1.25 billion pounds bonds

11:00 a.m.: EU Auction of Ph-4 EUAs

11:30 a.m.: Germany to sell 4 billion euros of bonds

11:30 a.m.: ESM sells up to 1.5 billion euros bills

Corporate Events

Earnings include Volvo, Kone, Telenor, Alfa Laval, Epiroc, Netflix, Philip Morris, Canadian National Railway

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