FX News Today
European Fixed Income Outlook: 10-year Bund yields are up 0.7 bp at 0.383% in opening trade, 10-year Treasury yields, which tried to extend gains overnight, are now down -0.2 bp at 2.937% and 10-year JGB yields pared earlier gains and are steady at 0.026%. Trade jitters seemed to ease somewhat yesterday but continued to linger overnight as the merry go round of tariff threats continued. The Asian session was mixed, with Chinese markets under-performing, but U.S. and U.K. stock futures are moving higher after Japanese bourses managed to carve out some gains. The focus is Europe today is on BoE and SNB decisions, with both central banks expected to keep rates on hold. For the BoE at least there is still some risk of a near term rate hike, which leaves the focus on signals in the minutes and statement.
FX Update: The dollar has traded firmer, with, for instance, USDJPY edging out a four-session high of 110.75, Cable making a fresh seven-month low of 1.3141, AUDUSD a 13-month low at 0.7329 and USDCAD posting a new one-year high of 1.3325. EURUSD has been among the exceptions in so far remaining within its range from yesterday, remaining near the 1.1550 and above the three-week low seen on Tuesday at 1.1531. Yield differentials remain a draw of the greenback, with Fed Chairman Powell yesterday maintaining expectations for further rate hike. The escalating trade war have been casting a pall on global equity markets, inspiring a choppy session in Asia so far, while the dollar is seen as something of a haven currency.
Charts of the Day
Main Macro Events Today
- SNB Monetary Policy Assessment – Expectations – The SNB will conduct its quarterly policy review, where it is widely expected to maintain the current policy, which centred around a negative rate of -0.75% and the threat of currency intervention to stymie franc strength against the euro.
- UK Public Sector Net Borrowing – Expectations – at 5 Bln pounds from 6.23 Bln in April.
- BoE Preview: The BoE’s MPC announces the outcome of its policy meeting, where a no change in the 0.5% repo rate and QE totals are widely anticipated. The focus will fall on the statement and minutes for guidance, which will be of particular interest following a run of overall disappointing data so far available from April and May.
- Philly Fed Manufacturing Index & Jobless Claims – Expectations –Philly Fed index should fall 9.4 points to a still-strong 25.0 in June. Initial jobless claims are seen edging up 1k to 221k in the week ended June 16, which coincides with the BLS employment survey week.
- BOE Gov Carney Speaks
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Andria Pichidi
Market Analyst
HotForex
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