Morning Report – Friday 7th August

Main Headlines

A trade deal between Britain and the European Union is still possible in September, Britain’s finance minister Rishi Sunak said on this morning. “On Brexit, as you will have heard recent reports, we remain confident that it’s possible to get a deal in September,” he told Sky News.

Equities were sold this morning, led by Chinese technology firms, after a U.S. move to prohibit transactions related to WeChat stoked tensions. China and Hong Kong shares saw the bulk of losses, with WeChat operator Tencent Holdings Ltd. slumping more than 10% at one point. The offshore yuan also retreated along with American and European equity futures. Treasuries rose.

GBP

Sterling rose to a five month high against the dollar yesterday after the Bank of England struck a less pessimistic tone on the coronavirus battered British economy. The central bank said the British economy would not recover to its size at the end of 2019 until the end of next year, later than its earlier estimate of a recovery by the second half of 2021. But its projections for 2020 were less grim than in May. The pound has reversed nearly all the losses sustained against the dollar following a selloff in March and April fuelled by the pandemic. Its gains have been more laboured against the euro and the yen.

EUR

Germany’s industrial sector, which was decimated by a lockdown imposed to slow the spread of coronavirus, expects production to increase in the coming three months, the IFO economic institute said today.

USD

The U.S. dollar bounced and the yuan slumped overnight after President Donald Trump took steps to ban transactions with the Chinese owners of two popular mobile apps. The greenback’s gains came as investors await the release of U.S. non-farm payrolls later today, which is forecast to show a slowdown in job creation.

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

7:00 a.m.: German Trade Balance
7:45 a.m.: France Trade Balance
8:30 a.m.: UK Halifax House Prices
9:00 a.m.: Italy Industrial Output
1:30 p.m.: US Non-Farm Payrolls
1:30 p.m. US Unemployment Rate