The theme on Friday was mostly about risk aversion, with EurChf being the centre of the action due to the political developments in Italy, where the League and 5-Star Movement will attempt to form a government. This hurt Italian stocks and put a bid into the safe-haven Swiss franc, partly due to a leak that suggested the ECB would be asked to write off its Italian government debt holdings. Otherwise it was generally quiet, with stocks and commodities ending flat, along with most of the other currency pairs after a choppy sideways session. US yields remain firm, with the 10 years still above 3% (3.063%) although technically both the 10Y and the 30Y did make a daily key reversal on Friday, suggesting some downside pressure on yields, and possibly the dollar, at the start of the coming week.
The coming week is a little thin for EU/US data, and it will be an EU holiday today. There are several Fed Speakers today though: Bostic, Harker, Kashkari – who may provide some volatility. Things do not really get going until Wednesday when the German Q1 GDP and the May, flash PMIs are due, along with the FOMC Minutes, which will be the main event of the week as traders attempt to glean what the Feds plans are for the rest of the year with regards to rate hikes. Thursday sees the EBC Minutes, while Friday will finish the week with the US Durable Goods Orders. The real action this week may be in Cable, with the UK release of the PSNBR (Tue), CPI, PPI, RPI (Wed), Retail Sales (Th), Preliminary Q1 GDP (Fri). There will be very little to come from Australia/NZ although the NZ Q1 Retail Sales and NZ Visitor Arrivals are due today.
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