It has been mostly a day of consolidation as we approach Wednesday’s FOMC decision although the commodity currencies remain under pressure on the back of some concerns of a less-dovish statement than had been previously expected underpinned the US$ on most fronts. The main FX focus on Monday was in Cable, which fell to a six month low as concerns grew that Boris Johnson will become prime minister and may resort to a no-deal Brexit if no headway can be made in the divorce negotiations with the EU.
In other markets, it was mostly a day of consolidation, with stocks and the metals going nowhere, although WTI ended down by 1% after Reuters reported that Iran and Russia ended talks without deal on when the next OPEC+ meeting is to be held.
In terms of data, the New York State Empire Mfg Index does not usually register as a market mover, but on Monday it fell to the worst level in 3 years, making the largest one-month fall on record and increased concerns about the direction of the US economy, and the prospect of rate cuts down the track, if data continues to hint at a concerted downturn in growth.
Looking ahead, Tuesday gets under way with the RBA Minutes which may put the Aud$ under further pressure if they show an increasing easing bias and concerns over economic growth. Also from Australia, we get the Q1 House Price Index (exp -1.6%qq), which are unlikely to be positive for the currency. From Europe, the ECB’s Draghi/De Guindos will be speaking early in the session, and in terms of data we get the German/EU ZEW Economic Sentiment Survey (exp: Sentiment;-6.0, Current Situation; +6.0), German PPI (exp +0.1%mm, +2.1%yy) and EU CPI (exp 0.3%mm, 1.2%yy). The US will see the Building Permits (exp -2.9%mm) and Housing Starts (exp -0.4%mm) for May, while C/B speakers will include the BOE’s Carney and the ECB’s Draghi (again) and Lane.
Economic data highlights will include:
Tue: NZ Q2 WBC Consumer Survey, China House Price Index, Australian House Price Index, RBA Minutes, German PPI, EU Trade Balance, CPI, German/EU ZEW Economic Sentiment Survey, US Building Permits, Housing Starts, API Weekly Crude Oil Stock Inventory, Speeches; ECB’s Draghi (twice), Lane, De Guindos, BOE’s Carney
Market moves, in brief:
FX: DXY 97.56 (+0.11%)
Bonds: US10Y; 2.093% (+0.14%), German 10Y; -0.245% (+4.68%), UK 10Y; 0.85% (+0.44%), Australian 10Y; 1.394% (+0.86%), NZ 10Y; 1.645% (-0.30 %), China 10Y; 3.272% (-0.37%)
Stock Indices: DJI; xxxx%, S+P; xx%, NASDAQ; xxxx%, EUStoxx50; xxxx%, FTSE100; xxxx%, Shanghai Composite; +0.20%,
Metals: Gold $1339 oz (-0.17%), Silver $14.83 oz (-0.20%), Copper $2.6465 lb (+0.65%), Iron Ore $104.17 per tonne (NYMEX) (-0.15%),
Oil: WTI $ 51.90 pb (-1.1%)
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