Morning Report – Wednesday 22nd July

Main Headlines

Congress probably won’t agree the next US stimulus bill within the next fortnight, Senate Majority Leader Mitch McConnell told Politico. Republicans working on their own plan broadly endorsed a fresh round of cash for individuals, extended supplemental jobless benefits and more money for testing, but voiced concerns about Donald Trump’s desired payroll tax cut. The differences between the GOP and White House may delay any action into August.

Equities in Asia struggled to add to recent tech led gains following a Wall Street session that lost direction amid concern over more stimulus. Australian shares led declines as the country recorded its worst day of virus cases. Chinese equities rallied as a jump in oil fuelled gains for energy producers. Gold continued to rally and Treasuries were steady.

Thailand and Taiwan may be added to the U.S. watchlist for currency manipulation after meeting all of the criteria set out by the Treasury Department, according to UBS Group AG. About 75% of central banks have engaged in “persistent FX intervention,” the report found. Asian nations made up about 60% of the economies under currency surveillance by the U.S. Treasury.

GBP

The pound has continued its rally touching six week highs against the dollar as market optimism over a potential coronavirus vaccine and an EU agreement on a recovery fund outweighed concerns about the UK economy. A relatively bullish assessment of the British economy by Bank of England chief economist Andy Haldane could also be supporting the pound.

EUR

The euro traded near its strongest level in more than a year after European leaders agreed a stimulus plan to fuel recovery from the economic damage caused by the COVID-19 pandemic.

USD

The dollar nursed losses against most currencies this morning, undermined by concern that Republicans and Democrats are struggling to reach consensus on the next round of U.S. economic stimulus measures. Appetite for riskier assets has improved greatly this week as progress in developing vaccines for the novel coronavirus reduced the U.S. dollar’s safe haven appeal.

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

2:15 p.m.: ECB’s Lagarde speaks in webinar
3:00 p.m.: ECB’s Guindos speaks

Corporate Events

Earnings include Akzo Nobel, Boliden, Iberdrola, Ingenico, Naturgy, Microsoft, Tesla, Thermo Fisher Scientific, Baker Hughes, CSX, Las Vegas Sands