Morning Report

Wednesday 27th May, 2021

“The dollar found support as views emerged that the Federal Reserve is slowly but surely edging towards a discussion about tightening monetary policy and crucial US inflation data is expected to come out later this week. We soon might see a strong jump in headline inflation reinforcing that policy changes could be approaching.”

Sam Cornford, Senior FX Dealer

Main Headlines

President Biden asked US intelligence agencies to “redouble” their efforts to investigate the origins of the Covid-19 pandemic and deliver within 90 days their conclusions, amid renewed questions over the role a laboratory in China might have played. Joe Biden said he would work with allies to press China to co-operate more fully with an international investigation into how the pandemic started. Chief executives of several leading US banks, including BoA’s Brian Moynihan, Citigroup’s Jane Fraser and Wells Fargo’s Charles Scharf expressed caution about dealing in cryptocurrencies in a testimony released ahead of a hearing before a Senate committee on Wednesday.

Dominic Cummings, Boris Johnson’s former chief adviser, has accused the UK PM of being “unfit for the job”, as he painted a picture of chaos, indecision and deceit at the heart of government as ministers battled Covid-19 and claimed that “tens of thousands of people died who didn’t need to die” because of multiple government failures, while giving evidence to MPs for seven hours. Switzerland has decided to put an end to the seven years of negotiations with the European Union that were supposed to modernise their bilateral relations. The main stumbling blocks were freedom of movement, the level playing field and state aid rules.


The pound is lower against most majors in the early morning trade. Boris Johnson is coming under pressure from senior Conservatives to introduce a UK carbon border tax to protect British industry from cheap competition from polluting countries. Rishi Sunak, chancellor, has ordered work to be done on the tax, a levy on carbon emissions attributed to imported goods that are not carbon-taxed at source. Treasury insiders said a carbon border tax would address “real issues” and that Sunak was interested in the proposal, but admitted that there were serious technical hurdles to be overcome. Liam Fox, former trade secretary, will on also urge the PM to lead a global debate on carbon border taxation ahead of the UN COP26 climate change summit.


The euro is weaker than the dollar and stronger than the pound this morning. Germany, France and the Netherlands have complained that the EU is not tough enough on Big Tech and called on regulators to make it harder for the likes of Google and Facebook to pursue killer acquisitions. A paper signed by Bruno Le Maire, France’s finance minister, Peter Altmaier, Germany’s minister for economic affairs, and Mona Keijzer, the Dutch economic affairs minister, said the EU’s flagship proposals for future technology regulation, the Digital Markets Act, lacked “ambition”. The countries also called on the EC to hand them more power to legislate and enforce tech policy at a country level, just days after Germany opened antitrust cases against both Amazon and Google.


The dollar is well bid against the pound and the euro overnight. HSBC has sold its US retail banking network, effectively bringing to a close its struggling North America business after a 40-year attempt to run a full-service bank in the country. Europe’s largest lender first considered a disposal of its consistently lossmaking American division late last year as part of the bank’s efforts to make deep cost savings of about $4.5bn and cut 35,000 jobs. HSBC said it had sold 80 of its 148 branches on the east coast to Citizens Bank. Ten branches on the west coast have been purchased by Cathay Bank, which has taken over $1bn of deposits and $800m of loans. The remaining branches will be wound down.


A rally in Asian stocks paused Thursday and U.S. futures inched lower as investors weighed the recovery from the pandemic and the possibility of reduced stimulus. The dollar held a climb and Treasury yields were stable. Shares retreated in Japan but advanced in China, where the currency also edged higher after the first trade talks with the U.S. under President Joe Biden. Australian shares shrugged off a virus lockdown in Victoria state. Contracts on the S&P 500 and Nasdaq 100 fell. The Russell 2000 Index of small-caps jumped overnight, outperforming a modest S&P 500 increase. Gold was at $1,902.30 an ounce, up 0.3%.

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

8:00 a.m.: Germany June consumer confidence

10:00 a.m.: Italy May consumer confidence

10:00 a.m.: ECB’s de Cos speaks

11:00 a.m.: Italy sells bills

11:45 a.m.: ECB’s Guindos speaks

1:00 p.m.: BOE’s Vlieghe speaks

2:00 p.m.: ECB’s Weidmann speaks

2:30 p.m.: U.S. Initial Jobless Claims, 1Q GDP

3:00 p.m.: ECB’s Schnabel speaks

Global Solutions Summit

IIF European Summit

Corporate Events

Cathie Wood, Changpeng Zhao at CoinDesk Consensus

Earnings include Aroundtown, Salesforce, Medtronic, Costco, RBC, Dell, HP Inc.

The Future of Sustainable Investing

Corporate Events

Earnings include Alibaba Health, Kingsoft, Huazhu, Technology One, Intuit, Zscaler, Heico, Toll Brothers, Nordstrom


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