26th June 2017 Market Update
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?? GBP – Despite 3 members of the Bank of England’s monetary policy committee last week voting for an interest rate rise, Mark Carney dampened market expectations on Tuesday by stating that he felt the current economic climate was not ripe for an interest rate rise, weakening Sterling. However MPC member Haldane spoke on Wednesday, and despite historically being dovish, he said he feels there should be an interest rate rise the second half of this year. This showed the Bank of England is clearly quite split on the matter with such public dissent quite rare.
There was no other significant data last week from the UK, however Brexit talks began and the UK appeared to take the back foot as a divorce bill will be the first thing agreed between the EU and UK. This week Carney will speak Tuesday following the financial stability report and will also speak again Wednesday. The UKs current account figures and final GDP reading is released Friday. Unless GDP figures change again (which is very unlikely) this data could cause minimal impact.
?? EUR – Last week was very quiet data wise for the EU until Friday, when manufacturing and services data was released. This was mixed, where the manufacturing data came in above expectations and the services data below, having minimal impact on the euro. As previously mentioned the Brexit talks began and the EU appeared to gain the upper hand, however it’s early days and therefore had minimal market impact.
Draghi will be speaking at the European Central Bank forum today and tomorrow. Any hint of interest rates rising could strengthen the euro. The EU will remain in focus Thursday and Friday as we Spanish and German CPIs Thursday, followed by Eurozone CPI Friday. This is expected to fall slightly, so an increase could boost the euro.
?? USD – Last week was very quiet for the US, with no significant data being released aside from the regular unemployment figures and crude oil inventories, which had minimal market impact.
Today we have core durable goods from the US, followed up by consumer confidence tomorrow. Tomorrow evening we have a number FOMC members speaking at various events, including Yellen. The markets still appear to expect a rate rise in the US this year, any hints towards this could strengthen/weaken the dollar. On Thursday we have the final GDP figures for the US from last quarter, which again could impact the rates depending on the data.
26/06/17 – 1.30 pm – Core Durable Goods Orders
27/06/17 – 3.00 pm – CB Consumer Confidence
27/06/17 – 6.00 pm – Fed Chair Yellen Speaks
28/06/17 – 3.30 pm – Crude Oil Inventories
29/06/17 – 1.30 pm – Final GDP q/q, Unemployment claims
26/06/17 – 6.30 pm – ECB President Draghi Speaks
27/06/17 – 9.00 am – ECB President Draghi Speaks
27/06/17 – 10.30 am – BoE Financial Stability Report
28/06/17 – 2.30 pm – BoE Gov Carney Speaks
30/06/17 – 9.30 am – Current Account
28/06/17 – 2.30 pm – BoC Gov Poloz Speaks
30/06/17 – 1.30 pm – GDP m/m
Our View: The main focus will be on the Eurozone’s inflation this week, which is expected to fall slightly. This will be a key indication to how well the Eurozone is recovering, and will also hint at whether the ECB will begin reducing its asset purchasing programme. There will also be a focus on GDP figures at the end of the week in the US and UK. These are final readings, and the likelihood is we could have another relatively flat week for Sterling as has been the case since the general election.
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