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Five Things - Europe

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Good morning. The U.S. says the outbreak has gone too far to contain with testing, there's no Brexit deal and there' a new anti-EU movement in Italy. Here's what's moving markets.


Virus deaths in the U.S. rose by more than 1,000 for a third consecutive day, as Health and Human Services Assistant Secretary Brett Giroir said the nation has about 200,000 infections daily, warning that testing and contact tracing would no longer be enough to contain the rampant outbreak. President Donald Trump cancelled the Republican convention in Florida, the biggest event of his re-election campaign, due to the latest figures on the outbreak in one of America's worst-hit states. On the scientific front, it has been found that the pathogen could travel more than 8 meters (26 feet) in a cold German meat plant with stale air, and home-made masks work best if layered. In a bid to help hospitals weather a surge in cases next winter, the U.K. plans to double the number of flu vaccinations to more than 30 million this season. 

No Deal Yet

The latest round of talks between Britain and the European Union over their future relationship ended with both sides saying they are still far from a deal. EU chief negotiator Michel Barnier told reporters on Thursday that "big differences" remain between the two parties and that a deal is "unlikely" if the U.K. refuses to back down on its red lines. The talks are now on course to run down to the wire, with discussions set to continue into September as officials seek a deal before European leaders meet in mid-October, just weeks before the U.K. finally leaves the EU single market and customs union at the end of the year.


A Brexit-inspired populist senator has launched an Italian political party committed to pulling the country out of the European Union and ditching the euro, dismissing the bloc as a "Germanic" construct. Gianluigi Paragone, a former talk-show host who was expelled from the ruling anti-establishment Five Star Movement, on Thursday unveiled his group called "No Europe for Italy" with a logo that includes the word "Italexit." Many Italians were angered by what they saw as the bloc's failure to respond quickly enough to the country's pleas for help when the coronavirus struck. Still, Paragone's move comes only days after EU leaders approved a 750 billion-euro ($870 billion) recovery fund, with Italy set to be its biggest beneficiary.

Trading Blows

China ordered the U.S. to close its consulate in the southwestern city of Chengdu, after the American government this week forced China to leave its mission in Houston, citing alleged spying. The Chengdu consulate serves as a key U.S. listening post for developments in Tibet, where Communist Party efforts to suppress dissent have long been a focus of tensions between China and the U.S. The closures add to a growing list of flashpoints between the two countries. 

Coming Up…

The week is ending on a down note for markets, with U.S. stocks selling off late Thursday on concern the economic recovery is stalling. In earnings today, French aerospace company Thales SA said the pandemic has wiped 2 billion euros off of revenue this year as it lowered its earnings forecast. Norwegian oil major Equinor ASA posted a surprise profit and kept its plans for dividends and capital spending. Later we'll get another glimpse at Europe's recovery with July purchasing managers' indexes for the euro area and the U.K. Other earnings highlights this morning include telecom giant Vodafone Group Plc and utility Centrica Plc. 

What We've Been Reading

This is what's caught our eye over the past 24 hours. 

And finally, here's what Garfield Reynolds is interested in this morning

There's a lot of chatter about dollar weakness just now, perhaps exacerbated by the way that U.S. equities are suddenly failing to rise when the greenback falls. But it's not really that weak. The Bloomberg Dollar Spot index is now sitting around about where it was before risk assets' March meltdown. It's also close to the bottom of the range that held throughout a tumultuous 2019 as the U.S.-China trade war heated up and then cooled down into a truce.

Negative real yields, U.S. virus woes, European stimulus and the Federal Reserve's QE have all been cited as drivers for dollar weakness. However, the greenback is just as likely to settle back into that 2019 range as it is to slump. It may even be more likely that its next move is a strong rally, and that it's part of a fresh flight to safety.

Garfield Reynolds is a Markets Live reporter and editor for Bloomberg News in Sydney

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