Morning Report

August 04, 2023

“Today’s figures reveal the UK Construction PMI surpassing predictions at 51.7, indicating robust business growth. Eurozone reports highlight German Factory orders surpassing expectations at 7.0%, and Italian Industrial production positively deviating at 0.5%. Later, significant reports from the US Bureau of Labor Statistics encompass Average hourly earnings, non-Farm employment change, and the Unemployment rate”.

Sam Cornford, Partner – Head of Trading

Main Headlines

U.S. job expansion has decelerated, yet remained sufficient to safeguard the economy against recession, as substantial interest rate hikes by the Federal Reserve dampened demand. The forthcoming employment report from the Labor Department, due later today, is anticipated to reveal a robust job market, with the unemployment rate holding steady at historically low levels, albeit with moderated wage growth. This report comes after recent data indicating resilient consumer spending and a notable drop in annual inflation growth in June. In other news, the U.S. House Oversight Committee is investigating China’s alleged involvement in recent breaches of Commerce and State department email systems, affecting multiple organizations. Hackers reportedly targeted email accounts of the U.S. ambassador to China and Daniel Kritenbrink, assistant secretary of state for East Asia, resulting in the theft of thousands of emails. China’s Washington embassy warned against unfounded accusations, citing the complexity of attributing cyber-attacks.

Jeremy Hunt has urgently asked the FCA to probe sudden bank account closures and has proposed fines for financial institutions breaching rules. The “debanking” issue gained attention when Nigel Farage stated his Coutts account was closed over his political views. Nikhil Rathi, CEO of the FCA, highlighted the importance of understanding the rise in closures which are mainly due to stricter anti-money laundering measures that have been implemented. In other news, there was a surge of over 25% in new car registrations in July in the UK compared to the previous year, extending the streak of monthly increases to 12, as indicated by early industry data released this morning. Also, the Society of Motor Manufacturers and Traders revealed that their latest market projections predict battery electric vehicles to attain a market share of 22.6% by 2024.


Sterling is well bid against most major currencies overnight. Earlier today we received the UK Construction PMI from the S&P Global. This report is a survey of purchasing managers in the construction industry that rates the relative levels of business conditions. The last few months of reporting has been all over the place, however this report beat the forecast by 36bps to 51.7, which indicates a healthy level of business expansion. Later today we will be hearing from BoE Chief Economist Huw Pill, who is also a member of the Monetary Policy Committee. He is due to speak about the latest interest rate decision at a virtual Monetary Policy Report National Agency Briefing. These public engagements are often used to drop subtle clues regarding future monetary policy, so we expect some degree of volatility during this event.


The Euro is stronger against the Dollar and weaker against Sterling this morning. Today there was a number of reports released from across the Eurozone. The first is the German Factory orders that measured the change in the total value of new purchase orders placed with manufacturers, which beat out the forecast by 91bps to 7.0%. Next is the French Industrial production report which measures the change in the total inflation-adjusted value of output produced by manufacturers, which negatively deviated from the forecast by 6bps to -0.9%. We also received the French Prelim private payrolls, which measures the change in employment figures (excluding Agriculture and Government), which only had a 1bps deviation from the forecast to 0.1%. lastly was the Italian Industrial production report which measures the same as the above, which had a positive deviation of 8bps to 0.5%.


The Dollar is weaker than most major currencies in the early morning trade. Later today we have a number of important reports coming from the US Bureau of Labour Statistics. The first is the Average hourly earnings report, which measures the change in the prices that businesses pay for labour (excluding agriculture). The last few months of reporting have been positive, with only a 3bps deviation from the forecast and most of those deviations being above expectations, with the current forecast at 0.3%. There is also the non-Farm employment change, which measures the change employment numbers (Excluding agriculture). The last month’s report was a change in trend from the previous periods, which fell below the forecast by 15K to 209K, however we will see if this is an anomaly or the beginning of a downward fall, with the current forecast a 205K. Lastly is the Unemployment rate report which measure the total unemployment percentage of the last month. The current forecast is at 3.6%, with the previous figures showing no clear trends, so we will see how this develops.


Stocks were mixed and Treasuries fluctuated before US employment data that will be scrutinized for clues on the path for Federal Reserve interest rates. Contracts for the S&P 500 and Nasdaq 100 indexes both gained, setting US stocks on course to trim their biggest weekly decline since March. The advance in futures was helped by gains of around 9% in after-hours trading for Inc. following robust results. That helped to offset a nearly 3% drop in post-market trade for Apple Inc., which undershot revenue expectations. Europe’s Stoxx 600 index was little changed.

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

8:00 a.m.: Germany June Factory Orders
8:30 a.m.: Hungary June Industrial Production
8:45 a.m.: France June Industrial Production
9:00 a.m.: Spain June Industrial Output
10:00 a.m.: Italy June Industrial Output
10:30 a.m.: UK July S&P Global/CIPS Construction PMI
11:00 a.m.: Euro-area June Retail Sales
2:00 p.m.: OPEC+ Holds Online Market Monitoring Meeting
2:30 p.m.: US July Nonfarm Payrolls

Corporate Events

Earnings include Naver, Itochu, Orix, Enbridge


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