Morning Report

September 6, 2023

“The Dollar soared to a six-month high yesterday as nerves grew over prospects for global growth. Further disappointing PMI data out of China and Europe are again encouraging safe haven bids and capital outflows.”

Tim Hallinan – Trading Director


Main Headlines

Upon returning from summer recess, Democratic Senate leaders in the US aimed to gain an advantage in negotiations with House Republicans regarding government funding. The looming possibility of an embarrassing government shutdown in October prompted a bipartisan effort among Democratic senators to support President Joe Biden’s request for a short-term spending bill. This bill aims to maintain agency funding until agreements can be reached for the full fiscal year starting on October 1. Meanwhile, voluntary supply cuts from Saudi Arabia and Russia have sent oil prices soaring to $90 a barrel, putting pressure on US disinflation hopes.

Prime Minister Rishi Sunak told ministers on Tuesday that he would only pursue a trade agreement with India if it benefited the whole of Britain. He discussed this before departing for the G20 summit in India later this week. His spokesperson informed reporters that negotiations for a free trade deal were advancing, and the Prime Minister was committed to an approach that served the interests of the entire UK. The G20, consisting of the world’s 20 major economies, aspires to address critical global challenges, although significant geopolitical rifts threaten progress. The absence of leaders like Putin and Xi, coupled with divisions over Ukraine, makes it challenging to reach a consensus Leaders Declaration at the summit, according to analysts and officials.


Sterling is trading slightly weaker against most major currencies this morning. The biggest catalyst for volatility today is set to be the Monetary Policy Report Hearings to Parliament’s Treasury Committee – BoE governor Bailey and others will testify on inflation and policy outlook in a hearing lasting several hours. Markets will be closely examining their language, hoping for subtle hints regarding future monetary policy and the direction of interest rates. The construction PMI is also due this morning, which is expected to tip back over into contraction at 49.8 after a previous reading of 51.7.


The Euro regained some ground against major currencies overnight, following a battering yesterday as revised-down final PMI data plunged services activity further into contractionary territory. Germany factory orders are in focus this morning, printing a -11.7% decline month-on-month compared to a -4.3% forecast, once again displaying weak demand in the Eurozone’s largest economy. A further indication of consumer health will come in the form of Eurozone retail sales this morning, which are expected to show a modest decrease of -0.1% since last month.


The Dollar has eased against most major currencies in the early morning trade after hitting a six-month high yesterday.  Owing to poor Chinese and Eurozone economic data, jitters over global growth dampened risk appetite and sent the safe-haven Dollar surging. Markets have much to digest coming out of the US today, with the trade balance, final services PMI, and ISM services PMI all released this afternoon – the recent economic resilience may be tested, but both PMIs are expected to show a continued expansion in US services. The Federal Reserve’s Beige Book, which is one of three sets of analysis used by the Fed to make their next rate decision, will also provide anecdotal evidence from the 12 Federal Reserve banks regarding local economic conditions this evening. Price action can be expected on USD/CAD if a shock occurs, as the Bank of Canada is widely forecast to keep the overnight rate static this afternoon amid recession fears.


Global stock indexes dipped while benchmark 10-year Treasury yields climbed to their highest levels in over a week on Tuesday. This came as oil prices surged, and investors assessed the likelihood of additional U.S. interest rate hikes. Simultaneously, economic data from China and Europe raised concerns about a potential slowdown in global growth. The Dow experienced the most significant decline among the three major stock indexes on Wall Street, despite some energy companies benefiting from higher oil prices. The pan-European STOXX 600 index slipped by 0.23%, and MSCI’s global stock gauge shed 0.60%.

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

8:00 a.m.: Germany July Factory Orders
9:00 a.m.: Czech July Industrial Output
9:30 a.m.: Germany Aug. Construction PMI
10:30 a.m.: UK Aug. Construction PMI
11:00 a.m.: Euro-Area July Retail Sales
11:00 a.m.: Greece 2Q GDP
2:30 p.m.: US July Trade Balance
2:30 p.m.: Fed’s Collins speaks
3:15 p.m.: BOE’s Bailey testifies to UK Parliament
3:45 p.m.: US Aug. Services/Composite PMI
4:00 p.m.: US Aug. ISM Services Index
4:00 p.m.: BOC Rate Decision
6:00 p.m.: Riksbank’s Thedeen speaks
8:00 p.m.: Fed releases Beige Book
Poland Rate Decision

Corporate Events

Earnings include Ashmore, Barratt Developments, Darktrace, Swiss Life, UiPath, GameStop,


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