RANsquawk

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  • Today sees the beginning of UK-EU Brexit negotiations with UK press suggesting a potential tspaneat to May’s leadership
  • French President Macron’s party and allies won a parliamentary majority with over 300 seats of the total 577-seats.
  • Looking ahead, highlights include the beginning of UK-EU Brexit negotiations, ECB’s...
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RANsquawk Weekly G10 Central Bank Monitor can be accessed here

NORTH AMERICA

TUE 20 JUN 2017 - 1330BST: US CURRENT ACCOUNT BALANCE (Q1)

Forecast: The deficit is seen narrowing to USD 124.9bln vs a deficit of 112.4bln prior.

WED 21 JUN 2017 - 1500BST: US EXISTING HOME SALES (MAY)

Forecast:...
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RANsquawk's Eco Week Ahead can be accessed here

FEDERAL RESERVE

• As expected, the FOMC hiked rates by 25bps to 1.00-1.25% – the second hike of 2017, and the fourth in the current tightening cycle. Minneapolis Fed President Neel Kashkari was the lone dissenter, once again.

• The revisions to its economic projections were mostly in-line with the...
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  • BoJ kept rates unchanged at -0.1% as expected and maintained QQE with Yield Curve Control as expected
  • Asian equities traded mostly higher across the board despite the negative lead from Wall Street. Nikkei 225 outperformed amid softer JPY
  • Looking ahead, highlights include US housing starts, Uni. Of...
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  • Fed hiked by 25bps as Exp. & outlined plans for balance sheet normalisation, expects inflation and growth to pick up
  • Subsequently seen as more hawkish than anticipated; support for US yields, USD, equities hampered before recovering into the close
  • Looking ahead, highlights include SNB & BoE rate decisions, US weekly...
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PREVIEW: BoE June Rate Decision and Minutes Release 1200BST/0600CST

  • Current BoE Base Rate: 0.25%, Asset Purchase Target: GBP 435bln of government securities and GBP 10bln of corporate debt.
  • Analysts expect the BoE to remain on hold this meeting with rhetoric from the minutes expected to have a neutral tone.
  • This meeting sees the release of the decision itself, the vote split and the minutes, but no Quarterly Inflation Report scheduled this...
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  • Asian equities traded with little in the way of firm direction despite tech names posting a rebound yesterday and the S&P 500 and DJIA posting record highs
  • FX markets were relatively quiet with the USD-index languished below the 97.00 level ahead of an anticipated ‘dovish hike’ by the Fed later today
  • Looking ahead, highlights include the UK jobs report, US CPI, DoEs and the FOMC rate...
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  • The FOMC is seen raising the FFR target by 25bps to 1.00-1.25%, but the main focus will be on the hike trajectory
  • Updated economic projections will be published, and there will be a post-meeting press conference with Chair Janet Yellen
  • Analysts aren’t expecting any dramatic changes in the Fed’s updated forecasts and ‘dot-plots’
  • Traders will be looking out for details on how the Fed intends to begin sspaninking its balance sheet
  • ...
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  • Asian equities managed to avoid further losses despite a continuation of tech-related selling pressure seen on Wall Street
  • In FX, USD/JPY nursed yesterday’s losses to test 110.00 to the upside, while EUR/USD languished after relinquishing the 1.1200 handle
  • Looking ahead, highlights include UK CPI, German ZEW, US PPI and API Inventories

ASIA

Asia sspanugged...
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  • Asian equities traded mostly lower after Friday’s tech sell-off seen on Wall Street while uncertainty continues to surround UK politics
  • Exit polls from the first round of France's parliamentary election suggest Macron’s La Republique En Marche party is to win between 415-455 seats (out of 577)
  • Today’s session sees a lack of tier 1 data releases

ASIA

Asia...
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FEDERAL RESERVE

  • A 25bps hike to the Federal Funds Rate target on 14 June 2017 is pretty much a done deal, with money markets pricing in a 99.6% chance that rates will be lifted for the second time this year to 1.00-1.25%. The real question is whether the Fed will maintain its “gradual” hike trajectory, which sees a total of tspanee rate rises per annum in 2017, 2018 and 2019.
  • The FOMC will also update its economic projections, which aren’t likely to see...
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Key Events: -

Monday:

Tuesday: UK Inflation Data (May)

Wednesday: US FOMC MonPol Decision, US CPI (May), US Retail Sales (May), UK Labour Market Report (Apr/May), New Zealand GDP (Q1)

Thursday: BoE MonPol Decision, SNB MonPol Decision, UK Retail Sales (May), Australian Labour Market Report (May)

Friday: BoJ MonPol Decision, Eurozone CPI (May, F)

North...
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  • Theresa May’s future is in doubt as her gamble to strengthen her hand looks to have backfired with projections for a hung parliament.
  • GBP fell around 200 pips on the release of the exit poll, while the latest forecasts from BBC seeing Conservatives at 318 seats (8 short of an absolute majority and 12 short from current) labour at 267.
  • **Note that a working majority can be obtained with 321 seats given that the tspanee...
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Following on from our June 8th ECB Decision Rate Preview, here is a quick take from today's meeting:

Key Points: -

- All tspanee key interest rates were left unchanged, as expected.

- The European Central Bank (ECB) stated that “policy rates are to remain at present levels for an extended period of time”; removing the word 'lower' from...
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ECB Preview: Rate Decision due at 1245BST/0645CDT and Press Conference at 1330BST/0730CDT

  • All rates and the current pace of asset purchases are expected to be left unchanged.
  • The ECB is expected to tweak its forward guidance by categorising its growth risks as balanced. There is also a chance it may adjust guidance on rates and asset purchases.
  • Staff will update macroeconomic projections; any shift in...
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  • Asian equities saw an indecisive session ahead of key risk events with notable data releases including Japanese GDP and Chinese Trade
  • USD held onto the gains seen after Former FBI Director Comey’s prepared statement was deemed less detrimental than some had feared
  • Looking ahead, highlights include ECB rate decision, UK election and Former FBI Director Comey’s...
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    • Asian equities saw little in the way of firm direction as participants remained weary ahead of a slew of upcoming key risk events
    • AUD took focus overnight in FX markets following better than expected domestic Y/Y GDP data
    • Looking ahead, highlights include Eurozone GDP and DoE Inventories

    ASIA

    Asia traded choppy with initial downside...
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Why has a Snap Election been called?

On April 18th PM Theresa May surprised many by calling for a snap election for June 8th . May stated that her reason in doing so was to “strengthen her hand in Brexit negotiations”. While at the time that the snap election had being called, the Conservative party had a commanding 20ppt lead in the opinion polls, an opportunity that may not occur again. As...
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  • AUD pared initial weakness after the RBA kept rates unchanged as expected while striking an overall neutral tone
  • Asian equities traded mostly lower with underperformance in the ASX and the Nikkei 225 hampered by a firmer JPY
  • Looking ahead, highlights include US APIs and the NZ GDT Index

ASIA

Asia traded mostly lower following a subdued Wall St. close where...
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  • Middle east tensions see crude prices jump over 1% as several nations cut ties with Qatar.
  • Subdued trade in Asia following Saturday’s terrorist attack in London.
  • Looking ahead, highlights include UK Services PMI, US ISM Non-Manufacturing PMI and Factory Orders.

ASIA

Asia dismissed the positive Wall St. close on Friday, to trade with a cautious tone after...
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Key Events: -

Monday: UK Services PMI (May), China Caixin Services PMI (May)

Tuesday: RBA MonPol Decision

Wednesday: Australian GDP (Q1)

Thursday: ECB MonPol Decision, UK General Election, Japan GDP (Q1, F) Chinese Trade Balance (May)

Friday: Canadian Labour Market Report (May), China Inflation Data (May)

North America: -

Ex-FBI...
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  • Asian equities benefited from the increased risk-appetite after all tspanee major US indices posted record highs following strong data
  • FX price action centered around JPY, with USD/JPY and JPY-crosses lifted as the heightened risk appetite spurred outflows from the safe-haven currency
  • Looking ahead, highlights include US jobs report, Fed’s Harker and...
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EXPECTATIONS:

- The consensus looks for 185k nonfarm payrolls to be added to the US economy in May, compared to 211k added in April. That would be in line with the 185k/month pace seen in 2017 thus far.

- The unemployment rate is forecast to hold steady at 4.40%, beneath the FOMC’s NAIRU projection between 4.70% and 5.00% (made in its March forecasts). It would also be firmer than the Fed’s end-2017 forecast for unemployment of 4.50%.

EARNINGS DATA:

-...
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  • Asian equities saw mixed performance with the Nikkei 225 supported by domestic data while soft Caixin PMI weighed on the Shanghai Comp.
  • AUD underperformed due to soft Chinese data despite strong Australian numbers. Polls remain in focus for GBP
  • Looking ahead, highlights include Eurozone and UK Mfg. PMI, ADP, ISM Mfg. PMI, DoEs and a slew of central bank...
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  • The latest YouGov has projected the UK Conservative party to fall 16 seats short of an overall majority with 310 seats
  • Asian equities traded relatively mixed as China returned to market and was greeted by encouraging PMI data
  • Looking ahead, highlights include Eurozone CPI, Canadian GDP, Chicago PMI, ECB’s Coeure, Lautenschlager, Fed’s...
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$SNAP ? https://t.co/72Ts0XtDkt