Morning Report

July 24, 2023

“Today’s flash reports from both the UK and the Eurozone revealed disappointing figures, with Flash Manufacturing and Flash Services reports falling below forecasts. Also in the US, there is speculation that slowing inflation could lead to the Federal Reserve ending its 16-month policy tightening streak, which has prompted asset managers to place record-level bets on the Dollar.”

Tim Hallinan – Trading Director

Main Headlines

The White House has formed the Office of Pandemic Preparedness and Response Policy, led by Paul Friedrichs, a retired Air Force major general and combat surgeon. This office will take over the duties of the current COVID-19 and M-Pox response teams, coordinating actions to prepare for and respond to biological threats or pathogens that could lead to pandemics or public health disruptions in the United States. In other news, President Joe Biden announced that AI companies, including OpenAI, Alphabet, and Meta Platforms, have voluntarily committed to implementing safety measures like watermarking AI-generated content. This move aims to address concerns about the potential misuse of artificial intelligence for disruptive purposes and safeguard U.S. democracy.

In June, British retail sales surpassed expectations despite high inflation, driven by hot weather and a rebound in food sales after disruptions from King Charles’ coronation. Official figures reported positive growth, while economists predict potential relief for households as energy prices are expected to decrease from July 1, providing more disposable income to consumers. Additionally, data revealed that Britain’s borrowing in the first three months of the financial year was lower than anticipated. The budget deficit in June amounted to 18.5 billion pounds, down 400 million pounds from June 2022. Despite this, Finance Minister Jeremy Hunt ruled out hurried tax cuts to benefit the Conservative Party before the upcoming election, considering the impacts of the pandemic and last year’s energy price surge.


Sterling is stronger against the Euro and weaker against the Dollar this morning. Today, we received the UK reports for Flash Manufacturing and Flash Services. These reports gauge the diffusion index level based on surveyed purchasing managers in the manufacturing and services industry, serving as leading indicators of economic health. Purchasing managers’ insights offer the most current and relevant understanding of a company’s view of the economy. However, the actual figure for Flash Manufacturing fell 11 basis points below the forecast, reaching 45.0. Similarly, Flash Services fell 16 basis points below the forecast, reaching 51.5. These figures potentially signal a continued downturn for the future.


The Euro is weaker than most major currencies in the early morning trade. Earlier today, we obtained the Eurozone’s reports on Flash Manufacturing and Flash Services. As mentioned before, these reports serve as leading indicators of economic health since purchasing managers possess the most current and relevant insights into a company’s perception of the economy. In the case of Flash Manufacturing, the actual figure declined by 8 basis points to 42.7, falling below the forecast. Similarly, Flash Services also fell below the forecast by 6 basis points, reaching 51.1. We will continue monitoring these reports to see if this trend continues.


The Dollar is well bid against most major currencies overnight. Amid speculation that slowing US inflation will prompt the Federal Reserve to end its 16-month run of policy tightening, asset managers have increased their Dollar bets to a record level. Institutional investors, such as pension funds, insurers, and mutual funds, raised their net short position on the Dollar by 18% during the week through July 18, based on data from the Commodity Futures Trading Commission. We will also be receiving the Flash Manufacturing and Flash Services reporting figures later today. The current forecasts are 46.1 and 54.0 respectively. Manufacturing was shown a slight downturn in recent months reporting, while Services has had a very positive showing, so we will track these trends to see how they develop.


European bonds gained and the euro plunged versus the dollar after manufacturing and services gauges from the common-currency region’s two biggest economies declined, raising concerns about the outlook for the bloc’s economy. Stocks wavered at the start of a week packed with major central bank policy decisions and corporate earnings as investors fretted about the magnitude of further interest rate increases and their effect on the economy. Spanish equities underperformed after an inconclusive outcome in the election on Sunday, with the uncertainty weighing on investor sentiment. US stock-index futures were little changed after the S&P 500 closed little changed on Friday and the Nasdaq 100 saw continued selling in technology companies following a disappointing batch of results. Treasury yields edged slightly higher along with the dollar.

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

7:00 a.m.: Finland June PPI
9:00 a.m.: Czech July Consumer, Business Confidence
9:00 a.m.: Spain June PPI
9:15 a.m.: France July P Manufacturing, Services PMIs
9:30 a.m.: Germany July P Manufacturing, Services PMIs
10:00 a.m.: Euro Area July P Manufacturing, Services PMIs
10:30 a.m.: UK July P Manufacturing, Services PMIs
10:30 a.m.: Slovenia May Average Real Monthly Wage
2:00 p.m.: Poland June M3 Money Supply
Romania June M3 Money Supply

Corporate Events

Earnings include Julius Baer, Ryanair, NXP Semiconductors, Naturgy Energy, Philips, and Brown & Brown.


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