Morning Report

Morning Report – Monday 10 May

Jon Robson, Head of Trading

“Last week’s nonfarm payrolls data sobered market participants, sending the dollar to a two-month low against major peers. Improvements in the global economic outlook will weigh the currency down further. Sterling soared after U.K. elections denied Scotland’s main independence party an outright majority.”

Main Headlines

The US government enacted emergency powers on Sunday in a bid to keep fuel supply lines open. Suppliers are growing increasingly nervous about the possibility of gasoline and diesel shortages across the eastern states after a cyberattack knocked out a massive pipeline. Colonial Pipeline said on Sunday that it was still developing a plan for restarting the nation’s largest fuel pipeline and would only bring it back when “safe to do so, and in full compliance with the approval of all federal regulations.” Gasoline futures surged by as much as 4.2% in Asian trading on Monday.

Boris Johnson has confirmed that the next stage of lockdown easing in England will go ahead on May 17 as planned. The cabinet will on Monday sign off on the third stage of lifting the Covid-19 lockdown in England: most businesses will be able to reopen, including indoor serving in pubs and restaurants. With more than a third of its adult population now fully vaccinated, the U.K. reported just two virus deaths on Sunday.


Sterling is higher against most major currencies this morning. Government officials disclosed that companies in freeports will not get to enjoy the full benefits of the new tax-efficient zones if they are exporting to certain countries including Canada, Norway, Switzerland and Singapore. Recent post-Brexit trade agreements with 23 different countries included clauses that specifically prohibit manufacturers in freeport-type zones from benefiting from the deals. Elsewhere, Keir Starmer has appointed Rachel Reeves as shadow chancellor after disappointing local election results.


The euro is lower versus most majors overnight. German Chancellor Angela Merkel’s conservatives slipped to an all-time low in a poll published on Sunday, while the Green party stayed in the lead to form the next government despite also losing ground. Olli Rehn, the governor of Finland’s central bank who sits on the ECB’s interest rate-setting council called for the European Central Bank to accept an overshooting of its inflation target to make up for many years of sluggish price growth.


The dollar is lower against the pound and higher against the euro in early morning trade. Americans accustomed to years of low inflation are beginning to pay sharply higher prices for goods and services as the economy strains to rev back up. Price tags on consumer goods from processed meat to dishwashing products have risen by double-digit percentages from a year ago. Meanwhile, homes are selling at a pace unseen since before the financial crisis, pushing up home values in nearly every U.S. ZIP Code.


U.S. equity futures climbed and Asian stocks were mixed Monday following another record high for the S&P 500 Index as weak jobs data reinforced the case for stimulus. Gasoline and crude oil rose. The materials sector led gains in an Asia-Pacific share index as commodities advanced. Australian stocks ended at an all-time high, while Hong Kong and China dropped. Iron ore futures surged and copper jumped to a record amid growing bets they’ll be among the biggest winners from a commodities boom. Treasury yields edged up toward 1.60% as traders brace for a busy week of auctions.

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

8:00 a.m.: Saudi Arabia 1Q GDP Constant Prices

9:00 a.m.: Turkey March Unemployment

10:30 a.m.: Euro-Area May Sentix Investor Confidence

11:30 a.m.: Germany sells bills

2:50 p.m.: France sells bills

Corporate Events

Earnings include BioNTech

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