Morning Report – Friday 3rd July
Boris Johnson will urge Britons today to act responsibly as pubs prepare to reopen, warning he’ll act to shutter parts of the economy again if the virus gets out of control. Restaurants, hotels, cinemas and hairdressers will also be allowed to open their doors tomorrow. In addition, visitors from countries including Germany, France, Spain and Italy will no longer have to observe a two-week quarantine from July 10.
Germany lawmakers ended a legal standoff over the ECB’s QE operations by voting to accept the explanation the central bank provided for its public sector purchase program. The measure meets the German Constitutional Court’s demand that the Bundestag review whether it’s “proportionate.”
Stocks in Asia tracked modest gains on Wall Street, while U.S. and European futures drifted lower ahead of the July 4th holiday. Treasury futures and the dollar were steady.
The pound continued to be driven up by the weaker U.S. dollar on Thursday and stayed neutral versus the euro as investors assessed the probability of Britain signing a trade deal with the European Union by the end of the year. The pound gave back some of its gains after a meeting between the EU and British chief negotiators scheduled for today to wrap up this week’s round of future relationship talks was cancelled.
The unemployment rate in the euro zone came in at 7.4% in May, as the region grapples with the economic shock from Covid-19. It comes after a number of European economies took their first steps to reopen in May, which has allowed some workers to return to their jobs. However, the social-distancing measures that remain in place and ongoing travel restrictions are limiting the pace of the recovery. Some economists are expecting much worse unemployment figures going forward as governments reduce benefit schemes. At the height of the sovereign debt crisis during the last decade, the euro area experienced an unemployment rate of just above 12%.
The dollar is trading in a narrow range this morning supported by safe haven flows as a resurgence of the coronavirus in the United States discouraged some investors from taking on excessive risk. The U.S. economy added more jobs than expected in June, data showed yesterday however, the reaction in the currency market has been muted because another spike in coronavirus infections threatens to once again put the brakes on economic activity.
Main Economic Data/Central Banks/Government (All Times BST)
7:00 a.m.: Russia June Services, Composite PMI
8:00 a.m.: Turkey June CPI, PPI
8:15 a.m.: Spain June Services, Composite PMI
8:45 a.m.: Italy June Services, Composite PMI
8:50 a.m.: France June Services, Composite PMI
8:55 a.m.: Germany June Services, Composite PMI
9:00 a.m.: Euro-Area June Services, Composite PMI
9:30 a.m.: U.K. June Services, Composite PMI
1:00 p.m.: ECB’s Knot speaks
5:00 p.m.: Russia 1Q GDP
U.S. observes Independence Day holiday
Marks & Spencer AGM