Morning Report – Tuesday 6th October

Main Headlines

Eurozone PMIs were released yesterday and disappointed to the downside. The PMI fell to a 3 month low of 50.4, below expectations. This is due to increased Coronavirus restrictions and comes as Paris closed bars and cafés for two weeks and Madrid faces more constraints.

Donald Trump was transferred out of hospital yesterday afternoon, for further treatment in the White House. The virus continues to spread throughout his inner circle as it was revealed that Kayleigh McEnany, his press secretary was infected yesterday. There is still some confusion on how severe the Presidents case is.

US equities hit a one month high yesterday on news that Donald Trump was out of hospital and a fiscal stimulus bill was close to agreement. European equities also gained yesterday, and there is a modest increase in Asian stocks this morning in Japan and Hong Kong as investors are becoming less risk averse.

GBP

The pound is trading relatively flat this morning after gains late last night. Although Brexit trade talks were supposed to officially close last week, they will likely continue until mid-October as there remains key differences. The UK construction PMI is released today and unless it is way off expectations, it will have little effect on the currency.

EUR

The euro is also trading flat against the dollar, after making gains yesterday. Coronavirus cases continue to rise in the continent, but markets will turn their attention to two ECB speakers, including ECB Chief Economist Phillip Lane who delivers a keynote address at the NABE conference.

USD

There was a sell off in the dollar yesterday, and it has failed to recoup its losses against most major currencies in early morning trading. Fed Chair Jerome Powell is set to speak today, however markets are aware that Powell has shifted the emphasis away from monetary policy to fiscal policy in recent weeks and so is unlikely to say anything of immediate concern to investors.

Main Economic Data/Central Banks/Government (All Times BST)
7:00 a.m.: Germany Aug. factory orders
8:00 a.m.: Norges Bank’s Olsen speaks
8:30 a.m.: Germany Sept. construction PMI
9:30 a.m.: U.K. Sept. construction PMI
9:35 a.m.: ECB’s Lagarde speaks (also at 3:00 p.m.)
10:00 a.m.: ECB’s Hernandez de Cos speaks
3:30 p.m.: SARB publishes six-month Monetary Policy Review
4:30 p.m.: ECB’s Lane speaks
5:00 p.m.: Russia Sept. inflation

U.S. Census crude export data for August
EIA’s STEO report, with forecasts on U.S. oil output, world supply and demand