September 3, 2021

“The dollar traded flat sinking to a one-month low as investors exercise caution before US nonfarm payrolls data is released amid fears that the Delta variant may have limited hiring across the US economy, colouring expectations about when the Fed might taper pandemic-era stimulus and how long it can wait before hiking interest-rates. The euro is also mainly flat following hawkish rhetoric from the ECB ahead of a policy meeting on September 9^th.”

Tim Hallinan, Trading Director

Main Headlines

According to the nonfarm payrolls report to be released this afternoon, employers in the U.S. estimate to have added 725,000 jobs in August, helping to push the unemployment rate down to 5.2% from 5.4%. Today’s data on the US labour market will come after jobless claims fell more than expected to a pandemic low of 340,000 earlier in the month. An in-line report would come close to crossing the Fed’s “substantial further progress” line at which point the Federal Reserve can taper pandemic-era stimulus and raise interest rates. Elsewhere, the estimated number dropped steadily by the end of trading in the Asian markets and could now register at 701,000 new jobs in the US economy.

The UK is gearing up for a battle to renew emergency Covid-19 legislation, as rebellious Tory MPs label the Coronavirus Act a ‘draconian’ restriction on rights which is no longer needed to contain the pandemic. Boris Johnson and his Ministers are anticipating a battle with anti-lockdown backbench MPs, over the government’s emergency powers to introduce Covid-19 measures. The legislation includes restrictions on public bodies, such as limits on school class sizes. Ministers will argue that emergency powers are required for a further six months to fend off a potential spike in Covid-19 cases through the autumn and winter across the country.

GBP

Sterling is lower against the dollar and the euro in early morning trade. The U.K. will send 4 million Pfizer/BioNTech vaccine shots to Australia in a swap deal to rapidly enhance their vaccination programme, with the first dose of 292,000 vaccines to be shipped shortly. This will bolster global vaccination efforts further following the UK’s 592,000 Oxford-AstraZeneca contribution to the COVAX distribution platform last week, which saw doses sent to Nigeria. Further, 499,000 doses are scheduled to be sent to Ethiopia and 105,000 does are heading to Niger imminently to bolster the COVAX programme’s global health efforts. The SNP has ruled out storing UK nuclear weapons at Faslane and Coulport if the Scots vote to leave the UK.

EUR

The euro is well-bid against most majors in early morning trade. The ECB will start slowing down its pandemic bond purchases in the fourth quarter and may not exhaust the whole 1.85 trillion-euro program before it ends next year, according to a survey of economists. An improved economic outlook will allow policy makers to reduce the pace of buying to about 50 billion euros in March. German general election candidate, Armin Laschet, is set to bolster his ranks with eight new political advisors including Peter Neumann from Kings College London to advise on the security situation in Afghanistan, as well as Germany’s role in NATO.

USD

The dollar is lower against the euro but higher against sterling. At least 45 people died in the Eastern United States, across six states after remnants of Hurricane Ida caused flash flooding across the region on Wednesday and Thursday. The Governor of New Jersey announced at least 23 people had died in the state, with 13 deaths registered in New York state as well. US President, Joe Biden has attacked the Supreme Court for allowing an anti-abortion law in Texas to stand, enabling federal laws in Texas to enact bans on abortion procedures after roughly six weeks. China has blamed Washington for threatening the fight against climate change, amid tensions after John Kerry visited Tianjin to push emission cuts.

Markets

Most Asian stocks rose Friday and the dollar held a drop after cyclicals led Wall Street to a record high ahead of a U.S. jobs report that will shape views on the outlook for Federal Reserve monetary policy. MSCI Inc.’s Asia-Pacific gauge climbed for a sixth day, the longest streak since January. Prime Minister Yoshihide Suga’s plan to resign sent Japanese shares to a three-decade high on expectations that his successor may boost stimulus. Chinese technology stocks fell, with investors continuing to weigh Beijing’s regulatory crackdown. U.S. futures advanced and European contracts were steady after energy shares helped the S&P 500 to an all-time high. A global stock index was also at an unprecedented level. The U.S. 10-year Treasury yield edged up and the dollar was near a four-week low.

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

8:00 a.m.: Russia Markit August PMI services, composite

8:30 a.m.: Swedbank/Silf August PMI services, composite

9:15 a.m.: Spain Markit August PMI services, composite

9:30 a.m.: Sweden 2Q current account balance

9:45 a.m.: Italy Markit August PMI services, composite

9:50 a.m.: France Markit August final PMI services, composite

9:55 a.m.: Germany Markit August final PMI services

10:00 a.m.: Norway August unemployment

10:00 a.m.: Euro-area Markit August final PMI services, composite

10:00 a.m.: Russia money supply narrow definition for August 27 week

10:30 a.m.: U.K. Markit/CIPS August final PMI services, composite

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

11:00 a.m.: Norway August house-price statistics

12:00 p.m.: U.K. to sell bills

1:30 p.m.: Iceland to sell bonds

7:00 p.m.: Baker Hughes U.S. rig count

Spain sovereign debt rated by Moody’s, DBRS

Corporate Events

Earnings include Allfunds Group

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