Morning Report

September 8, 2023

“In an otherwise quieter week for macroeconomic data, the Dollar continues its bulldozing rally as further labour market data compounded the market’s desire for its superior economic fundamentals.”

Tim Hallinan – Trading Director


Main Headlines

US employers have not increased layoffs as much as anticipated by economists, suggesting a resilient job market despite the Federal Reserve’s efforts to slow it. Recent data shows unexpected drops in new state unemployment benefit filings to February lows and in the number of people receiving jobless benefits for over a week to July lows, as per the Labor Department’s report. Yet, another Labor Department report showed labour cost pressures easing in the second quarter and worker productivity rising significantly, but these improvements are unlikely to lead the Fed to ease its inflation-control efforts.

Meanwhile, concerned about the economic outlook, British employers reduced their hiring through recruitment agencies at the fastest rate in over three years, according to a survey by the Recruitment and Employment Confederation (REC). The hiring of permanent staff saw its most significant decline since June 2020, early in the COVID-19 pandemic, while spending on temporary workers dropped for the first time since July 2020. Additionally, in the latest subsidy auction to support new renewable energy projects in Britain, no contracts were awarded for offshore wind projects. This outcome was attributed to the global inflation increase and its impact on supply chains.


Sterling is well bid against most major currencies this morning, having regained some ground against the Dollar overnight but still set to clock a 0.7% weekly loss. A BoE survey showed that British businesses have revised down expectations of how much they will inflate prices over the coming year to 4.9%. Recent encouraging signs of abating inflation has led the market to price a peak rate of 5.6%, compared to nearly 6.5% a couple of months ago, causing some downward pressure on the Pound. In a quiet week for European data releases, Sterling can be expected to drift sideways versus the Euro until the macro data diary picks up into next week, beginning with UK earnings and claimant data.


The Euro remains fragile, weakening against Sterling but picking up against The Dollar overnight. European gas prices soared up to 12% this morning, as Chevron workers at its LNG projects in Australia went on strike after pay talks broke down, adding to Eurozone economic woes and inflationary pressures. German final CPI came in as expected, and French industrial activity picked up with a 0.8% increase since the previous month. No other real market-moving data is expected from the Eurozone today – all eyes will turn to the ECB interest rate decision next Thursday, with markets expecting a hawkish pause.


The Dollar has eased against most major currencies in the early morning trade. As things stand, the mighty Dollar is likely to clock an 8-week winning streak – the longest in nine years. Yesterday saw it buoyed yet again by upside surprises on the macro releases, this time through jobless claims at their lowest level since February. Continuing unemployment claims fell, and non-farm productivity rose at a 3.5% annualised rate, as US growth fundamentals continued to outshine other major economies. The Fed still looks set to pause this month, but November’s meeting has moved towards a coin toss, and rates may have to remain elevated for longer than previously expected as the Fed struggles to rein in the labour market. On today’s agenda, there is wholesale inventory data and the value of outstanding consumer credit.


Asian shares mirrored a US decline, the dollar’s rally paused as it weakened against most major currencies, and Treasury yields fell. Hong Kong trading was cancelled due to weather, and Japanese equities dropped for a second day after slower economic expansion. US equity futures held steady, while European contracts inched higher. European investors are eyeing Apple suppliers, as the company lost around $200 billion in market capitalization due to reports of China limiting iPhone use by state employees, and protectionism concerns affected Asian supplier shares.

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

9:00 a.m.: Spain July Industrial Production
11:00 a.m.: Greece Aug CPI, July Industrial Production
12:00 p.m.: UK to sell bills
2:00 p.m.: Ukraine 2Q GDP, Aug. CPI
3:00 p.m.: Fed’s Barr speaks
4:00 p.m.: US July Wholesale Inventories
9:00 p.m.: US July Consumer Credit

Corporate Events

Earnings include Kroger


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