Today's news headlines: 

‘China manufacturing activity slows for first time since April 2020’. Last night, China’s Caixin Manufacturing Purchasing Managers’ Index posted its first sub-50 reading since the pandemic’s start. This PMI data hasn't been particularly strong so far this year, with the highest reading coming in January at 53.0, indicating the slowing nature of the Chinese economy. Further stimulus measures are expected to come from the People’s Bank of China after policymakers cut the reserve requirements for banks in July. The outbreak of the Delta variant in the country has also stifled activity, with the third-largest port partially shutting down just a few weeks ago. (Financial Times) 

‘Eurozone inflation rises to decade high of 3%’. Inflation in the Eurozone has reached its highest level for almost ten years, driven by the solid economic rebound, higher energy costs, and mounting supply constraints. Analysts expect this inflationary pressure to subside heading into the New Year, but this still provides ammunition to those pressuring the European Central Bank to announce its plans for a rollback of bond purchases. The German ten-year bond yield hit its highest level in over five weeks on the back of the latest inflation reading. (Financial Times) 

Today

US markets closed lower on the last day of August as the S&P 500 fell 0.13% while the Dow Jones traded down 0.11% off its open. European stocks also took a knock after the latest inflation data as the Euro Stoxx 600 fell 0.5%. Major currency pairs are little changed this morning as the Dollar sell-off takes a breather.  

Events

Australia GDP q/q: 0.7% vs 1.9% previously
China Caixin Manufacturing PMI: 49.2 vs 50.3 last month
German Retail Sales m/m: -5.1% vs 4.2% last month
German final Manufacturing PMI: 8:55AM
US ADP Non-Farm Employment Change: 1:15PM
US ISM Manufacturing PMI: 3:00PM
FOMC member Raphael Bostic speaks: 5:00PM
OPEC meetings: All day

Interbank rates:

GBP/USD – 1.3756
GBP/EUR – 1.1660
EUR/USD – 1.1797
USD/CAD – 1.2605

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.