Morning Report

July 8, 2021

“The dollar reached near a three-month high versus major peers today after minutes of the Fed’s June policy meeting confirmed the world’s biggest central bank could move toward tapering its asset purchases as soon as this year. We can expect the Fed to announce its tapering strategy as soon as August, potentially leading the dollar to trade with an upward bias.”

Sam Cornford, Partner & Head of Trading

Main Headlines

President Biden made the case for spending trillions of dollars on U.S. infrastructure, paid for by higher taxes on corporations, at an Illinois community college yesterday, as opposition builds from U.S. business groups. His speech focused on what he called “human infrastructure” priorities that did not make it into a $1.2 trillion bipartisan deal struck with Republicans. The policies include tax rebates for parents, free preschool and community college, healthcare and clean energy subsidies as well as 12 weeks of paid medical leave, financed by raising corporate taxes on U.S. companies. Biden said a minimum tax of 15% on companies that manage to avoid paying taxes would raise $240 billion and could be used to finance his plans, which he acknowledged are “really expensive”.

The UK opposition has warned of “a summer of chaos and confusion” as it challenged the PM to set out clearly the likely fallout of the government’s plan to end most Covid-19 restrictions in England on July 19. Mr Starmer, the Labour leader, said businesses and families would face “huge disruption” in the coming weeks; millions of people could be told to self-isolate in the face of Covid-19 cases rising to an estimated 100,000 a day. Johnson declined to tell Starmer the numbers for hospitalisations, long Covid cases and deaths the government was expecting as it prepared to lift most remaining legal restrictions.


Sterling is lower than most majors in the early morning trade. Companies and accountants are attacking sweeping plans to overhaul auditing and corporate governance in the UK following financial scandals, claiming the changes will stifle businesses’ growth and increase costs. The Quoted Companies Alliance, representing listed SMEs, said the cost of “overburdensome regulation” was already shrinking public markets and “there is a risk of worsening the situation” through the government’s proposed reforms. KPMG, one of the Big Four auditors, said the plans to overhaul auditing practices would not improve the quality of scrutiny of companies’ financial statements.


The euro is well bid against most majors overnight. The European Commission is to put forward proposals to increase the transparency and decrease the cost of market data as it aims to boost the competitiveness of the EU exchange traded fund industry. Tilman Lüder, head of the securities markets unit at the EC, said Brussels was currently in discussions with data providers about developing a consolidated tape. Lüder, who was speaking at the FT Live ETF European Leaders Forum last week, said the commission now hoped that a beta version of the consolidated tape will be available to the market by 2023. A consolidated tape is an electronic system in which data feeds from different exchanges are banded together to create a summary across all markets.


The dollar is lower than the euro and higher than the pounds this morning. US antitrust enforcers have mounted their first challenge to a mobile app store, accusing Google of overcharging developers who sell through the Play store that is built into its Android operating system. The complaint was the fourth against the search giant in the US in less than a year and the first to take on smartphone platforms at the centre of modern consumer technology. Google has previously faced less public criticism than Apple over the charges it levies from mobile app developers and the restrictions that prevent developers from sidestepping those charges. Apple’s App Store has been the subject of a high-profile private antitrust case from Epic Games.


Shares retreated in Hong Kong and China, where a crackdown on technology firms has hurt sentiment. Chinese officials also hinted the central bank could make more liquidity available to bolster growth. Another virus state of emergency looms for Tokyo, leaving Japan’s market under pressure. U.S. and European equity futures dipped after the S&P 500 and Nasdaq 100 hit records. Ten-year U.S. Treasury yields steadied around 1.30% after falling for seven trading days as inflation expectations ease. The Fed minutes indicated officials weren’t ready to communicate a schedule for scaling back their bond-buying program, due to high uncertainty over the course of the recovery. They did, however, want to establish a plan in case a move is needed sooner. Gold was at $1,797.65 an ounce, down 0.3%.

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

8:00 a.m.: Germany May trade

12:35 p.m.: ECB’s de Cos speaks

1:00 p.m.: ECB strategic review published

1:30 p.m.: ECB minutes

2:30 p.m.: Christine Largarde holds press conference.

2:30 p.m.: U.S. initial jobless claims

5:00 p.m.: EIA crude oil inventory report

Poland rate decision

Corporate Events

Earnings include Chr. Hansen


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