Newsletter – 28th June 2017

Morning Bulletin

Yesterday

  • The Euro was given a real lift in FX space yesterday morning following ECB President Mario Draghi’s press conference. Draghi’s comments during the conference were very much viewed as hawkish as the President suggested he was prepared to look past those ‘temporary’ factors currently weighing on inflation, and remained optimistic about the Eur ozone’s growth prospects. But it was the slight hint that the ECB could be considering to begin the unwinding of its huge monetary stimulus program that really underpinned Euro strength.
  • The Euro rallied hard in FX space during his conference with the single currency pushing a 2017 high of 1.1296 against the US Dollar by mid-afternoon. Whilst GBP/EUR traded as low as 1.1279.
  • Scottish First Minister Nicola Sturgeon has announced that she and her SNP party would not seek legislation for a second Scottish independence referendum.
  • The IMF have downgraded US Growth forecasts for 2017 and 2018:
    •  2017: revised down to +2.1% from +2.3%
    • 2018: revised down to +2.1% from +2.5%
  • Some of yesterday’s Key data releases:
    • UK CBI Realised Sales 12 (4 Exp)
    • US CB Consumer Confidence 118.9 (116.1 Exp)
    • US Richmond Manufacturing Index 7 (4 Exp)
  • Speaking yesterday afternoon, US Fed Member Harker reiterated that he still backs one more rate hike this year and that he thinks the current weakness in inflation would be temporary.
Overnight

  • Speaking yesterday evening US Fed Chair Janet Yellen said that it is appropriate to raise rates gradually and to predictably shrink the Fed’s balance sheet.
  • Fed Member Kashkari stated that the Central Bank should now wait before rushing to hike interest rates again this year. He cited concerns around weak inflation and tepid wage growth at the main reasons to hold off.
  • Having already been bashed by ECB Mario Draghi’s comments and the downgrade to US growth forecasts, the US Dollar took a further hit last night as it emerged a Senate vote on the US Healthcare bill has been delayed once again, reinforcing those doubts about the President Trump’s ability to enact key policy changes.
  • German Import Prices m/m -1.0% (-0.6% Exp)
  • UK Nationwide HPI m/m 1.1% (0.1% Exp)
Today
  • Not much in the way of key economic data due for release today.
  • However we could see movement this afternoon with some of the world’s most eminent central bankers, including BOE Gov Carney, BOJ Gov Kuroda and ECB Pres Draghi due to take part in a panel discussion at the European Central Bank forum in Portugal.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1263 -0.32
GBP/USD 1.2820 +0.06
EUR/USD 1.1379 +0.36
AUD/USD 0.7594 +0.17

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Eurozone M3 Money Supply y/y 5.0% 4.9%
10.00 EUR Italian Prelim CPI m/m 0.1% -0.2%
13.30 USD Goods Trade Balance -66.2Bn -67.1Bn
13.30 USD Prelim Wholesale Inventories m/m 0.2% -0.5%
14.30 CAD BOC Gov Poloz Speaks
14.30 EUR ECB President Draghi Speaks
14.30 GBP BOE Gov Carney Speaks
14.30 JPY BOJ Gov Kuroda Speaks
15.00 USD Pending Home Sales m/m 0.9% -1.3%