Morning Report

Monday 24th May, 2021

“The dollar was pinned near a three-month low against the euro, with support coming from rising optimism about economic reopenings in the region. Both currencies, however, appear to be capped by uncertainties around fiscal policies.”

Sam Cornford, Head of Trading

Main Headlines

Prospects look dim for bipartisan agreement on an infrastructure-spending bill as lawmakers argue over the basic questions of what should be included, how large it should be and how to pay for it. The Biden Administration faced strong resistance from Republicans in the Senate after re-sizing its proposed package from $2.25 trillion to $1.7 trillion. Areas affected by the spending revisions include investments in manufacturing, R&D and broadband. If the stalemate continues, Democrats may attempt to move on their own, using budget reconciliation rules to pass a package without needing any Republican votes.

The Confederation of British Industry has unveiled a report calling on the government to support regulation reform to enable British businesses to recover post-pandemic. The report published today focuses on placing incentives for investment and innovation as a key objective when drafting regulations to help the country recover from the twin shocks of Covid-19 and the U.K.’s withdrawal from the European Union. The CBI forecasts that improving overseas trade, developing skills in regional clusters around the U.K. and strong decarbonisation strategies could result in a £700bn economic boost.


The pound is lower against most majors overnight. U.K. Home Secretary Priti Patel is set to announce a reform of the nation’s immigration system in a speech later today. She will pledge to overhaul immigration rules to allow Britain to attract skilled workers while tightening security. Meanwhile, Cabinet Office minister Michael Gove has backed the findings of a new report advocating broad-ranging reform of the UK’s civil service, with a focus on wider recruitment and more accountability for senior officials.


The euro is stronger against all major currencies overnight. European leaders condemned a move by Belarus to force a Ryanair flight bound for Lithuania to land in Minsk so that it could arrest a leading opposition activist who was travelling from Athens to Vilnius. Elsewhere, the EU finance ministers meeting in Lisbon on Saturday expressed broad support for upcoming proposals for a Europe-wide tax on kerosene jet fuel used in aircraft.


The dollar is lower against the euro and higher against the pound in early morning trading. Covid-19 cases and deaths have reached their lowest level for a year in the United States, adding fewer than 30,000 cases a day for the first time since June of last year. The US Centers for Disease Control and Prevention warned that under-vaccinated areas could become hot spots for a mutation of the coronavirus first detected in India and is increasing surveillance of the more-transmissible variant.


U.S. equity futures fluctuated, and Asian stocks were steady on Monday as traders weighed the volatile slump in cryptocurrencies, the inflation outlook and China’s intensifying effort to cool raw-materials prices. Shares posted modest gains in Japan, China and Australia but retreated in Hong Kong. S&P 500, Nasdaq 100 and European equity contracts oscillated after U.S. stocks closed mixed on Friday. Bitcoin advanced to about $35,100 following another weekend of big swings. The stalling commodities boom remains in focus as China tries to temper speculation, with the nation vowing severe punishment for violations ranging from excessive speculation to spreading fake news.

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

12:00 p.m.: Israel April unemployment
1:00 p.m.: Turkey sells bonds
4:30 p.m.: BOE’s Bailey, Cunliffe, Haldane and Saunders before Treasury Committee

Corporate Events

European Council leaders’ summit
Poland’s Duda visits Turkey
Consensus by CoinDesk virtual gathering
74th annual World Health Assembly
Public holiday across some of continental Europe