Morning Report – Tuesday 15th September

Main Headlines

U.K. Prime Minister Boris Johnson’s plan to renege on part of the Brexit divorce deal passed its first hurdle in Parliament late Monday after a difficult debate in which senior members of his own party criticised the move. The House of Commons passed the Internal Market Bill by 340 to 263 in its first main vote, allowing it to go through to the next stage in the parliamentary process today. The PM said the proposed legislation, which will rewrite part of the Withdrawal Agreement, is “essential” to maintain the U.K.’s economic and political integrity. He accused the European Union of making “absurd” threats to stop food moving from mainland Great Britain to Northern Ireland.

AstraZeneca’s vaccine trial remains on hold in the U.S. as regulators examine a serious side effect suffered by a U.K. patient, according to Reuters. The drug maker and the University of Oxford restarted the British trial Saturday.

U.S. stock market futures advanced and the offshore yuan climbed to the highest level in more than a year after data showed China’s economic recovery sped up in August. Asian stock markets were mixed Tuesday, with equities rising in China, Hong Kong and South Korea but declining in Japan and Australia. S&P 500 futures rose after the benchmark gained Monday. Gold ticked up and Treasuries were flat.

GBP

The pound rose against the euro and a broadly weaker U.S. dollar yesterday, boosted by improved risk appetite in global markets, while investors awaited the outcome of a vote on a bill which the EU had told London to scrap. The EU says it cannot trust those who break agreements and that if the bill is not effectively scrapped there will be no trade deal to cover Britain when it leaves the customs union and single market at the end of 2020. One-month implied volatility hit new five-month highs, indicating increased expectations of future price swings.

EUR

The euro gained for a fifth straight day yesterday and is on track to post six consecutive days of gains. Initial resistance is seen around the highs posted during last weeks ECB press conference.

USD

The dollar dipped against riskier currencies on overnight as hopes for a COVID-19 vaccine and big corporate deals improved investor appetite for riskier currencies.

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

8:45 a.m.: France Aug. CPI
9:15 a.m.: ECB’s Panetta speaks
10:00 a.m.: Italy Aug. CPI
11:00 a.m.: Germany, Euro-Area Sep. ZEW Survey

Poland rate decision
FOMC Meeting
Russia holds multilateral military exercises in southern Astrakhan region