Morning Report

Morning Report – Friday 12th June

Main Headlines

The United Kingdom has abandoned its plan to introduce full border checks with the European Union on Jan. 1 as British ministers face pressure from businesses not to increase chaos already caused by the coronavirus outbreak. Instead, Britain will introduce a temporary “light-touch regime” at ports for incoming EU goods.

The S&P 500 plunged almost 6% yesterday on the latest pandemic worries, but Wall Street’s beating may not last long. Asian stocks and European futures pared losses and U.S. contracts rose amid speculation the selloff may have been overdone. Treasuries halted a four-day rally and oil headed for its first weekly loss since April. Gold was steady.

Gloomy news related to the virus highlighted fears of a second wave. The city of Houston isn’t convinced by Steve Mnuchin’s vow to keep economies open come what may. It may reimpose stay-home orders and open an unused Covid-19 hospital as cases in Texas surge. California also saw a faster pace of new infections. Donald Trump’s campaign is so worried it will ask those attending his campaign rally in Oklahoma to waive liability if they contract the illness.


The pound fell against the dollar and euro yesterday and is on track to end its longest winning streak against the U.S. currency in over two years, driven by dollar moves and Brexit-related concerns. The pound had risen 3.9% against the dollar in ten consecutive days of gains starting on May 28 – its longest winning streak since January 2018.


The European Union sees a path towards a compromise on a trade deal with Britain but London must first be more realistic in what it expects to achieve, an adviser to the EU’s chief trade negotiator said yesterday. The euro was little affected by the sell off in equities which is seen as a positive sign.


The U.S. dollar held firm overnight against riskier currencies after global stock prices tumbled on renewed doubts over the prospects of a quick recovery in the global economy. Doubts over the economy stemmed in part from the U.S. Federal Reserve’s dire economic assessment as well as fears over new coronavirus infections, though some analysts said a stock market correction was inevitable after a rally.


The safe-haven Swiss franc has benefitted from risk aversion and has recovered its lost ground against the euro over the past two weeks. It is also trading at a three month high versus the dollar.

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

7:00 a.m.: U.K. April GDP, trade, industrial and manufacturing production
7:45 a.m.: France May CPI
8:00 a.m.: Spain May CPI
8:00 a.m.: Turkey April current account, industrial production
9:00 a.m.: Italy 1Q unemployment
10:00 a.m.: Euro-Area April industrial production
12:00 p.m.: ECB’s Wunsch speaks