Morning Report

September 4, 2023

“Softening labour market data coming out of the US last week, and much-awaited government stimulus measures in China, are putting downward pressure on the Dollar this morning. Meanwhile, revised 2021 GDP data for the UK puts it as one of the top economic performers of the G7 of that year.”

Tim Hallinan – Trading Director

Main Headlines

In 2023, US back-to-school spending is poised to reach a record high, despite the resumption of student debt repayments on October 1, which will strain many Americans’ finances. The National Retail Federation, a retail trade group, anticipates spending to exceed $135 billion, a $24 billion increase from the previous year. Simultaneously, the Biden administration has requested an additional $4 billion from Congress to support disaster relief efforts in the wake of recent US disasters. President Biden’s initial request to Congress included approximately $40 billion in extra spending, with $24 billion designated for international needs, particularly Ukraine, and $12 billion for the Federal Emergency Management Agency’s disaster relief fund.

On Saturday, British Finance Minister Jeremy Hunt stated his commitment to halving inflation by the end of 2023. The projection is for Britain’s inflation rate to decrease to approximately 5% by year-end, half of the level recorded in January. Achieving this target would fulfil one of the five key promises made by Prime Minister Rishi Sunak to voters for 2023. In July, the annual consumer price inflation rate in Britain eased to 6.8%, although it remained the highest among the Group of Seven economies.


Sterling is well bid against most major currencies overnight. ONS revisions to the UK’s 2021 GDP growth have upended the post-Covid economic narrative, with output up 0.6% on pre-pandemic levels by the fourth quarter of 2021. No longer an underperforming outlier in the Group of Seven, economic recovery had been the third fastest at that point, behind the US and Canada. Owing to a sparse data calendar today, investors will be looking towards the rest of the week to generate price action for Sterling, beginning with final PMIs due tomorrow morning.


The Euro is stronger against the Dollar and weaker against Sterling this morning. The German trade surplus shrank slightly in July, according to data released this morning, at €15.9bn versus €18.0bn expected. Exports weakened again, slipping 0.9% on the previous month due to weak foreign demand, although this was less than the 1.5% forecast. Speeches from several ECB members are to come this afternoon, including President Lagarde. Markets will be keen for more clues as to the rate path in the Eurozone following recent economic data indicating softening inflation and a slowdown in the economy.


The Dollar is weaker than most major currencies in the early morning trade. With US markets closed for a national holiday, volumes are likely to be thin, but the currency has lost some safe-haven appeal upon raised prospects that Chinese stimulus measures might stabilise the economy. Friday’s jobs report boosted expectations that the Federal Reserve may be done with hiking rates, with money market traders pricing in a 93% chance of a pause at this month’s meeting. Despite a gain of 187,000 in non-farm payrolls, a 736,000 jump in those in the workforce is potentially an ideal scenario for the Fed, where an expanding labour supply could ease wage pressures whilst hiring remains strong.


Global shares rose on Monday, lifted by a growing expectation that the Federal Reserve will not raise interest rates anymore, and by hopes that China’s steady drip feed of policy stimulus might stabilise the economy. Hong Kong benchmark indexes outperformed the region as investors resumed trading after a closure on Friday. Real estate stocks extended their advance, with a Chinese property shares gauge rising above 7% on stimulus measures taken to bolster the sector. Other major indexes also gained, while US markets are shut Monday for the Labor Day holiday.

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

8:00 a.m.: Germany July Exports
8:00 a.m.: Sweden 2Q Current Account
9:00 a.m.: Spain Aug. Unemployment
9:00 a.m.: Turkey Aug. CPI, PPI
1:30 p.m.: ECB’s Elderson speaks
3 p.m.: Israel Base Rate
3 p.m.: ECB’s Nagel speaks
3:30 p.m.: ECB’s Lagarde speaks
4:00 p.m.: ECB’s Panetta at EU hearing on digital euro
Markets are closed in US, Canada

Corporate Events

Earnings include, Opap, Burkhalter


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