Morning Report

September 17, 2021

“The dollar held near a three-week high against a basket of major currencies on Friday after a raft of strong US economic data rekindled sentiment that policy tightening by the Federal Reserve would be forthcoming. Additionally, the economy was given a boost as US retail sales unexpectedly increased in August by 0.7%, despite estimates predicting a 0.7% fall.”

Tim Hallinan, Trading Director

Main Headlines

The US economy has shown resilience over the last month during the delta surge. US consumers increased retail spending in the last month with the nations’ sales up by 0.7% according to the Commerce Department. A move back into schools, colleges and offices saw consumers spending more across the economy on groceries and merchandise. Meanwhile, initial jobless claims rose 20,000 last week to 332,000 but crucially the figure remained near a pandemic low, according to the Labor Department.

UK chancellor Rishi Sunak is planning to use October’s budget to set out new fiscal rules to rein in UK borrowing, demonstrating Conservative fiscal discipline ahead of the next election. Reining in fiscal rules comes amongst fears in the Treasury that any rise in interest rates could blow a hole in heavily indebted UK public finances. Sunak’s new rules will commit him to stop borrowing to fund day-to-day spending within three years. According to insides, Sunak’s fiscal plans will also require underlying debt to start falling by 2024-25; it currently stands at about 100% of GDP. Sunak has been concerned by the spectre of rising interest rates since March and will use the budget to finally take action.


Sterling is higher against the dollar and lower against the euro overnight. A cross-party group of MPs has criticized the UK tax authority for settling a long-running dispute with General Electric over a contested tax bill of around $1bn. The case was due to reach the Supreme Court in the UK, however, it emerged that HMRC and GE had reached a $112bn deferred tax settlement. The AUKUS security pact has been seen as a boost for Boris Johnson’s ‘Global Britain’ agenda which sat at the heart of the government’s integrated review of defence, development and security. The trilateral security agreement underlines Britain’s strategic tilt towards the Indo-Pacific region, with the country seeking deeper ties with allies to counter an aggressive China.


The euro is higher against most majors in early morning trade. Election candidate, Armin Laschet, who hopes to become the German Chancellor on September 26th warned that a government involving the far-left Social Democrats in Germany would be an extreme threat for Europe. The French embassy in Washington has cancelled a reception after the announcement of the AUKUS security arrangement which will support Australia to develop nuclear submarines to be used in the Indo-Pacific. Foreign Minister, Jean-Yves Le Drian called the cancellation of Australia’s defence contract with France a “stab in the back”. Government officials in Berlin have repeatedly warned Kremlin counterparts to stop an uptick in cyber-attacks ahead of the German elections to pick a candidate to replace Angela Merkel as Chancellor.


The dollar is lower against most major currencies overnight. The Fed’s Powell orders ethics review after officials move to offload shares, reviewing how senior central bankers can participate in the financial markets, after conflict-of-interest questions were raised about investment activities of two regional presidents. This follows the news that Dallas and Boston Fed presidents, Robert Kaplan and Eric Rosengren actively traded last year as the Fed was moving to shore up financial markets. The French foreign ministry is said to be furious after the State Department only gave France a few hours of notice about the AUKUS submarine deal with Australia. France accused President Biden of acting as rashly as his predecessor, Donald Trump.


Asian stocks and U.S. equity futures edged up Friday as traders evaluated the resilience of the global recovery to the prospect of reduced Federal Reserve stimulus and risks from China. Equities gained in Japan and Hong Kong, where technology shares rose for the first time this week. Chinese stocks were mixed amid the debt crisis at China Evergrande Group and a short-term cash injection by the central bank to help soothe nerves. Miners sapped Australian shares after a slide in iron-ore prices. S&P 500, Nasdaq 100 and European futures were in the green. U.S. stocks closed mostly lower after swinging between gains and losses ahead of Friday’s quarterly expiration of options and futures, which can trigger volatility.

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

10:00 a.m.: ECB July current account

11:00 a.m.: Euro-area August CPI, July construction output

12:00 p.m.: U.K. to sell bills

1:00 p.m.: Irish Central Bank Governor Makhlouf speech

7:00 p.m.: Baker Hughes U.S. rig count

Corporate Events

Portugal sovereign debt to be rated by Moody’s

S&P to rate Belgium and Spain sovereign debt

Russia holds legislative elections from today

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