Morning Report

Morning Report – Monday 27th July

Main Headlines

European and U.S. stock futures are edging higher after last week’s declines despite the latest on U.S.-China tensions, while the dollar index ticked down to touch the lowest level in more than a year. Billionaire investor Ray Dalio warned that the conflict could expand into a “capital war” and harm the U.S. currency. Elsewhere, spot gold touched an all-time high of $1945, possibly reflecting the current troubles of the global economy, while crude oil futures trimmed early losses.

The Fed meets this week after labour data last week showed the U.S. employment recovery wobbling. No major announcements are anticipated but analysts expect policymakers may begin laying the groundwork for more action in September or the fourth quarter. The U.S. central bank could firm recent hints about the benefits of an average inflation target, which would allow rates to stay lower for longer.


The pound surged ahead against a falling dollar last week and cable posted its biggest weekly gain since the first week of June, although investors remained cautious about data pointing to an economic recovery. British PMI data beat all forecasts in a Reuters poll of economists and shot up to 57.1 in July from 47.7 in June, indicating activity began to grow again after collapsing during the lockdown which began in March.


The danger to the euro zone economy from the coronavirus pandemic is not yet over, European Central Bank board member Fabio Panetta told La Repubblica, adding that he saw no need to make any tweaks to the bank’s massive asset purchase programme. While recent data has shown an improvement in industrial production, retail sales and the purchasing managers’ index, he said this had been expected given the earlier catastrophic drop in economic activity and government measures to boost the economy.


The dollar continued to slide this morning as cracks in the U.S. economic recovery drove investors away from the world’s reserve currency as they increased bets the Federal Reserve could flag another accommodative shift in its outlook this week. The greenback fell to a four month low against the yen, a new 22-month low versus the euro and a five year low against the Swiss franc. The value of short dollar positions hit its highest in two years last week, while the futures market is pricing negative rates in the U.S. next August and no upward movement in the next three years.

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

9:00 a.m.: Euro-area June M3 Money Supply
9:00 a.m.: Germany July IFO Business Climate
10:30 a.m.: Germany to sell 4 billion euros of 364-day bonds
1:30 p.m.: US Durable Goods Orders
1:50 p.m.: France to sell bonds
IMF considers South Africa’s request for a loan

Corporate Events

Earnings include Aeroports de Paris, Atos, Faurecia, KPN, LVMH, Moncler