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02/09 – supply chain disruption stifling growth

GBP: Clouds forming

EUR: ECB still singing from the same hymn sheet as the Fed

USD: Waiting for tomorrow’s employment report


Yesterday’s latest UK manufacturing numbers, whilst largely in line with expectations, indicated a worrying slow down to the economic recovery. Caused by a combination of severe disruptions to supply chains and raw material shortages, the growth momentum for manufacturing was undoubtedly eroded last month.

Although solid gains in output and new orders were achieved, companies reported that production, delivery and distribution schedules were experiencing substantial delays. Encouragingly, business confidence remained elevated despite the widespread shortages as firms focused on the long-term outlook and brought back furloughed workers.

However, the solid jobs growth seen in August could soon wane if supply disruptions and shortages of both labour and required skills continue to worsen.


Economic data out of the Eurozone continues to be very mixed. Yesterday saw the release of German retail sales numbers which showed a surprisingly steep fall of over 5% for the month of July.

Against that, the recent rise in EU inflation headline CPI numbers has started talk of an earlier-than-forecast reduction in monetary stimulus, causing a surge in Bond yields. The ECB are very conscious of any premature monetary tightening and stated; “Wages are not yet following the course of inflation” and “ECB should be prudent, cautious regarding course of inflation.”


Ahead of Friday’s key government monthly jobs report (non-farm payroll), yesterday’s private ADP monthly employment report came in much lower than forecast, showing an increase of 374k workers versus a forecast of 600k. Despite the ADP report being a terrible predictor of NFP almost entirely throughout the pandemic, it is still something the market reacts to, immediately taking the $ down by 0.5% across the board.

As a result, overnight we have seen many tier 1 investment banks reduce their forecasts for Friday’s numbers.


US Federal Reserve Chair Powell’s very dovish testimony last Friday continues to support risk currencies. The AUD and NZD for example have posted gains of over 2% versus the greenback as market expectations of a tightening of US monetary policy get pushed back.

Market rates

Today’s Interbank Rates at 08:40 against sterling. Movement vs yesterday.

US dollar$1.378 
Australian dollar$1.866 
South African randR19.78 
Japanese yen¥151.7 

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.