September 1, 2021

Today, the dollar traded near its lowest point in nearly three weeks versus major peers as investors are focused on a key US jobs report due this Friday, for clues on when the Fed might begin paring stimulus. It seems that the dollar’s uptrend is over for the time being at least, especially after Jerome Powell successfully separated the debate over taper timing from any decisions about higher interest rates.

Sam Cornford, Partner & Head of Trading

Main Headlines

President Biden launched his most forceful defence yet of America’s chaotic pullout from Afghanistan, a day after the last US troops flew out of Kabul and ended their 20-year military presence in the country. In remarks delivered from the White House, the US president combatively attempted to put a lid on the biggest national security crisis since he took office in January and rebut criticism that his administration mishandled the departure. Biden also said the pullout marked the start of a new chapter in American foreign policy under his watch — one that will reject large troop deployments and nation-building around the world.

The UK foreign secretary will face a parliamentary grilling today as London and other western capitals face accusations of failing to anticipate how the Taliban would sweep across Afghanistan following the withdrawal of international forces. The House of Commons foreign affairs select committee will challenge Dominic Raab on his department’s failure to foresee how the Afghan national forces would surrender or to prepare an evacuation strategy earlier. The work of British diplomats and other officials on the ground in Afghanistan since the US announced a date for withdrawal 18 months ago will also be called into question, according to MPs on the committee.

GBP

Sterling is stronger than the euro and weaker than the dollar in the early morning trade. Britons’ borrowing fell in July defying economists’ expectations as households continued to grow their savings, suggesting the summer rise in coronavirus infections hit spending. UK consumer credit dropped to zero last month, its lowest since February and down from £300m in June, according to data from the BoE released yesterday. “[The results] are consistent with a further slowdown in the economic recovery in July, driven partly by some households hunkering down again in the face of a surge in Covid-19 cases,” said Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics. The drop in borrowing slipped well below the £441m increase forecast by economists polled by Reuters.

EUR

The euro is lower versus most majors this morning. Poland moved on Tuesday towards declaring a state of emergency in two regions on its border with Belarus after hundreds of illegal migrants crossed into its territory this month. The government formally asked President Andrzej Duda to impose the state of emergency for 30 days in parts of the Podlaskie and Lubelskie regions. It was not immediately clear when Duda would respond but he is a close ally of the governing nationalists and is expected to approve the request. It would be the first time that Poland has declared a state of emergency on any part of its territory since the fall of communism. Poland began building a barbed wire fence last week along the border in an effort to curb the flow of migrants from countries such as Iraq and Afghanistan crossing from Belarus.

USD

The dollar is stronger than most majors overnight. The chair of the US Securities and Exchange Commission is warning that cryptocurrency trading platforms are putting their own survival at risk unless they heed his call to work within the nation’s regulatory framework. Gary Gensler said that while he remained “technology neutral”, crypto assets were no different than any others when it came to such public policy imperatives as investor protection, guarding against illicit activity and maintaining financial stability. Gensler expressed disappointment with the industry’s response to his suggestion that trading platforms register with the SEC on the grounds that a sufficient number of cryptocurrencies qualify as securities.

Markets

Global stocks hovered near a record Wednesday and U.S. and European equity futures climbed as investors bet on a resilient economic recovery from the pandemic. Yields on U.S. sovereign debt rose. MSCI Inc.’s Asia-Pacific gauge hit the highest level in over a month, bolstered by a rally in Japan. Chinese technology stocks extended their rebound in the hope that the worst of Beijing’s regulatory clampdown has passed. S&P 500, Nasdaq 100 and European futures were in the green. U.S. stocks had edged back overnight while staying in sight of all-time peaks amid mixed data, including weaker consumer confidence and a jump in home prices. Gold was at $1,816.77 an ounce, up 0.2%

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

8:00 a.m.: Germany July retail sales
8:00 a.m.: U.K. Aug. nationwide house prices
8:00 a.m.: Russia Aug. Markit PMI manufacturing
8:30 a.m.: Sweden Aug. Swedebank manufacturing PMI
9:00 a.m.: Turkey 2Q GDP
9:00 a.m.: Hungary Aug. manufacturing PMI, June trade balance
9:15 a.m.: Spain Aug. Markit manufacturing PMI
9:45 a.m.: Italy Aug. Markit manufacturing PMI
9:50 a.m.: France Aug. manufacturing PMI
9:55 a.m.: Germany Aug. Markit/BME manufacturing PMI
10:30 a.m.: U.K. Aug. Markit manufacturing PMI
11:00 a.m.: Euro-area July unemployment rate
11:00 a.m.: U.K. to sell bonds
11:00 a.m.: Sweden to sell bills
11:30 a.m.: Germany to sell bonds
12:00 p.m.: Ireland Aug. unemployment rate
2:00 p.m.: ECB’s Weidmann Speaks at Bundesbank Bank Symposium
2:15 p.m.: U.S. ADP employment change
4:30 p.m.: EIA U.S. crude oil inventories
6:00 p.m.: Russia July unemployment, retail sales
Italy Aug. budget balance
OPEC+ meeting in Vienna

Corporate Events

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