Morning Report – Thursday 13th August

Main Headlines

Facebook Inc. is facing new allegations that it illegally harvests the biometric data of users, this time in a lawsuit that targets the company’s photo-sharing app Instagram. In the new lawsuit, filed Monday in state court in Redwood City, California, the company is accused of collecting, storing and profiting from the biometric data of more than 100 million Instagram users, without their knowledge or consent.

European and U.S. stock futures slipped as this week’s rally in global equities showed signs of fatigue. The dollar weakened and Treasury yields ticked lower. Shares in Japan saw the bulk of gains during the Asian session as the MSCI gauge for the region recouped all its 2020 losses. Hong Kong stocks dipped, and Australian equities underperformed as earnings at some firms disappointed. The S&P 500 on Wednesday momentarily topped its February high, capping the more than 50% rally since the lows in March. Gold resumed its advance.

GBP

Sterling held above key levels yesterday, clinging on to recent gains on the back of dollar weakness, which outweighed the impact of a record drop in Britain’s economic output. The UK economy shrank by 20.4% between April and June, when the country’s coronavirus lockdown was tightest, data showed, representing the largest contraction reported by any major economy so far. June’s GDP data, meanwhile, offered the first window into the recovery as restrictions eased and the economy began to recoup losses, growing 8.7% month-on-month. With Brexit negotiations taking a breather, Britain said on Wednesday its latest round of trade talks with the United States made positive progress in many areas, and that both sides agreed negotiations should continue at pace in the coming months.

EUR

The euro remains well supported and currently driven by dollar movements. The currency is trading within 1% of 2020 highs. Speculators have record long positions which could be a sign a reversal is on the cards. The euro’s rally is delivering a much-needed boost to Ford Motor Co., which has been expanding exports of U.S.-built muscle cars and sport-utility vehicles.

USD

The dollar fell against most of its peers on Thursday amid fading hopes for a compromise between Republicans and Democrats over additional stimulus for the U.S. economy. The greenback was hampered by a decline in Treasury yields however, this is likely to only be a temporary setback as U.S. lawmakers will eventually agree to more stimulus to help the economy recover from the coronavirus.

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

7:00 a.m.: Germany CPI
8:00 a.m.: Spain CPI
11:00 a.m.: Italy CPI
1:30 p.m.: US Jobless Claims