Morning Report

Wednesday 4 August, 2021

“The dollar remains pinned low against majors in Europe as investors await US jobs data to get a steer on the interest rate outlook in the short to medium term. A positive payroll report on Friday could boost the greenback encouraging chatter that monetary policy tightening may follow.”

Tim Hallinan – Trading Director

Main Headlines

The Biden Administration has announced a three-month evictions moratorium, intended to protect 90% of US tenants, following a tense dialogue with Democrat progressive lawmakers. The CDC has stated that a new order halting evictions in US counties with the highest rates of Covid-19 transmissions will be put in place to protect renters. The measure aims to protect 3.4 million Americans in danger of eviction, whilst preventing rising cases due to evictions in specific counties. The CDC’s eviction moratorium will remain in place until October 3rd.

Up to £5bn of state-backed Covid-19 emergency loans are at risk of not being repaid, as companies are due to default on the loans. Between 5% and 10% of UK SMEs that tapped into the government’s $47.4bn ‘bounce back’ support scheme missed repayments. This data suggests that defaults on the ‘bounce back’ loans are set to be smaller than first feared. Bankers said that a strong economic recovery helped many companies to regain their financial independence, with 5% of all ‘bounce back’ loans being paid back in full within a 12-month interest free period.


Sterling is well-bid against most majors overnight. The UK is set to approve vaccinations for those aged 16 and 17 in the country for the first time. The younger age group will be advised to get the Pfizer or Moderna vaccines. The Royal Navy’s UK Maritime Trade Operations reported a potential hijacking 60-miles from Fujairah, UAE yesterday. This follows UK reports to the UN Security Council that Iran committed the deadly drone attack on an Israel-managed tanker off the coast of Oman last week. UK ministers are weighing up the arguments to reject Nvidia’s $40bn takeover of ARM, weighing national security concerns above the economic benefits of the takeover.


The euro is lower against sterling and higher against the dollar in early morning trade. Spain has called on the EU to back measures to push down electricity prices which are soaring for Spanish consumers. Deputy Prime Minister, Teresa Ribera, has urged a compromise on high prices to avoid a backlash against Brussels’ carbon-cutting measures. Robert Habeck, leader of the German Greens stated that the German elections in September must focus on climate change, amid wildfires in Turkey and flash floods in Germany recently. The Greens have a slim chance of leading Europe’s largest economy and a strong chance of making it into government.


The dollar is lower against most majors overnight. The Chair of the SEC, Gary Gensler, has called on Congress to give his agency additional regulatory powers to protect investors from fraud, scams and abuse in cryptocurrency markets. The US is moving forces to the Gulf to investigate a suspected hijacking by the Iranian Revolutionary Guard Corps or Iranian proxies on the Asphalt Princess. The Governor of New York, Andrew Cuomo has been called to resign by President Biden after a damning report issued accusations of sexual harassment by him towards his staff.


Asian stocks rose Wednesday and U.S. futures were steady as concerns over China’s technology clampdown eased a little and company earnings helped counter worries about the delta strain of Covid-19. Hong Kong rallied after Chinese state media tempered an attack on gaming companies, bolstering Tencent Holdings Ltd. Shares slipped in Japan, where SoftBank Group Corp. retreated on a potential block of its $40 billion sale of Arm Ltd. to chip company Nvidia Corp. U.S. equity contracts were steady in the wake of a record S&P 500 close on robust earnings. European futures rose. Investors continue to assess regulatory risks in China as Beijing pushes on with a crackdown on technology giants. The 10-year U.S. Treasury yield held its retreat, while Japan’s 10-year yield fell to zero for the first time since December. Oil weakened toward $70 a barrel.

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

9:15 a.m.: Spain July Markit PMIs

9:45 a.m.: Italy July Markit PMIs

9:50 a.m.: France July Markit PMIs

9:55 a.m.: Germany July Markit PMIs

10:30 a.m.: UK July Markit PMIs

11:00 a.m.: Euro-area June retail sales

11:00 a.m.: Sweden sells bills

11:30 a.m.: Germany to sell 4 billion euros bonds

Corporate Events

Earnings include GM, CVS, Uber, Sony, Intesa Sanpaolo, Trane Technologies, Sampo Oyj, Legal & General, Siemens Energy, Commerzbank, Tenaris, Wolters Kluwer, AIB Group, Taylor Wimpey

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