FOREX News Today

European Outlook: Stock markets in Asia rebounded, (Nikkei 225 closed up 1.07% at 15,599) following on from gains on Wall Street yesterday and as the Yen fell back from the highs seen in the wake of the BoJ decision yesterday. U.S. and U.K. stock futures are also higher as are oil prices although at USD 46.63 per barrel the front end WTI future remains far below recent highs. With this week’s round of central bank meetings out of the way the focus is fully on the Brexit referendum on June 23 and markets are likely to continue to be jumpy ahead of the result. Today’s data calendar is pretty empty and only holds Eurozone current account and BoP data, which usually are not market moving.

Brexit campaigning suspended: Following the tragic murder of UK MP and Remain supporter Jo Cox on the streets of her constituency yesterday, the campaign has been suspended for at least today. GBPUSD initially fell to lows of 1.400 before rallying to 1.4250, the news appearing to give the moral high ground to the remain camp.

BoE and SNB Waiting for Brexit Vote: BoE and SNB left policy on hold yesterday, with the Brexit referendum clearly forcing the central bank’s hand and the uncertainty making any interpretation of economic data more and more difficult. The BoE left its implicit tightening bias in place, but highlighted that the last Inflation Report was based on the assumption that the U.K. votes to remain in the EU. In case of a vote in favour of Brexit all bets are off again, as the central bank will have to balance the impact of likely higher imported inflation with the likely slowdown in output growth. Although taking the wider implications for the rest of the EU into account, relative growth and bank rate projections may end up not looking fundamentally different after all.

US data reports: U.S. NAHB homebuilder sentiment index rose 2 points to 60 in June, a little better than forecast, from 58 over the past four months. This is the highest since 61 in January. The prior 58 was the lowest since May 2015. The single family sales index edged up 1 point to 64 versus 63 in April and May. The future sales index jumped to 70 from 65. The index of prospective buyer traffic improved 3 points to 47 from 44.

Main Macro Events Today

• Canada CPI : We expect total CPI, due today, to expand at a 1.7% annual pace in May following an identical 1.7% y/y gain in April. But total CPI is seen jumping 0.6% m/m in May after the 0.3% gain in April, as higher gasoline prices and depreciation of the Canadian dollar both conspire to drive the index higher relative to April. The Bank of Canada’s core CPI index is projected to expand at a 2.2% y/y pace in May, matching the 2.2% rate in April. But here too we see acceleration in the monthly growth rate, with core CPI seen expanding 0.5% m/m in May after the 0.2% gain in April.

• Draghi Speech: The ECB president Mario Draghi will be speaking at 15:00hrs. Although he is unlikely to repeat the famous “whatever it takes” stance, expect some positive words on the euro project. The occasion of the speech is in honour of Theodor Waigel, (a former German Finance Minister) who is often referred to as the “father of the euro”. Definitely one to watch today.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

European Outlook: The recovery in stock markets didn’t last long and markets headed south again in Asia overnight, with U.S. and U.K. stock futures also under pressure. Fed and BoJ kept policy on hold and while this was largely expected, there were some lingering hopes that at least the BoJ would add further stimulus but with the statement maybe a tad less dovish than expected, the Yen strengthened and Japanese equities sold off, with the Nikkei down -2.98%. The Hang Seng is down -2.20%. The focus now shifts to BoE and SNB meetings today. Again no changes are expected, but with Brexit risks looming the tone of the statements will be watched carefully. Event risks continue to overshadow data releases, which today include U.K. retail sales and the final reading of Eurozone May HICP numbers.

The FOMC left the funds rate unchanged: The Fed again did not define a “balance of risks” and didn’t give any clear indication of the timing of the next hike, though it still expects two more this year. “Growth in economic activity appears to have picked up,” said the statement, but the “pace of improvement in the labor market has slowed.” This contradiction was the opposite in the previous statement, though it also noted that household spending has improved and the drag from net exports has lessened, while business investment has been soft. The Fed again indicated that inflation is running below target. There was no dissent this time from Esther George, (long time hawk), compounding the more dovish interpretation. Likewise, the dot-plot was significantly lowered, growth outlook trimmed and inflation outlook tweaked just slightly higher despite the rebound in energy prices. FOMC forecast revisions released with the policy statement show surprisingly large downward revisions in the official GDP forecasts for 2016, followed by downward bumps across the forecast horizon, leaving a distribution of 2016 Fed estimates that lie almost entirely below our own 2.2% forecast.

BOJ: The Bank of Japan refrained from expanding monetary stimulus as Governor Haruhiko Kuroda and his board continues to gauge the economic impact of their unpopular negative-rate policy ahead of an election next month. With the uncertain outlook for global markets also giving reason for pause, the BOJ held its key interest rate at minus 0.1 percent and kept the annual target for expanding the monetary base at 80 trillion yen ($764 billion). Dollar and GBP weakness and yen strength continued following the announcement USDJPY traded as low at 104.04 and GBPJPY as low as the 147.30.

US data reports: Revealed a welcome June Empire State bounce to 6.0 that reversed the May plunge to -9.0, though industrial production underperformed in May with a 0.4% drop led by a 7.0% drop in the vehicle assembly rate to an 11.4 mln clip. The vehicle sector pullback explains May weakness in other payroll and sentiment data, and a likely vehicle sector rebound into the shifting summer retooling period should support a June factory sector bounce as seen with Empire State. We also saw a 0.4% May PPI rise with a firm 0.3% core price increase, as US inflation measures continue to document both a rebound in commodity prices and a firm 2016 core price path.

Main Macro Events Today

• Swiss National Bank  The official view from SNB remains that prolonged period of low interest rates carries risk for global financial stability.  Rates are currently -0.75% and no change is expected.  Prolonged period of low interest rates carries risk for global financial stability.  The SNB’s baseline scenario assumes that economic conditions for the Swiss banking sector improve. Economic growth picks up moderately in the euro area, but unemployment remains high in many member states. In the US, growth remains robust. Growth in China slows further and some major emerging markets remain in recession. In Switzerland, the recovery continues and unemployment begins to decline slowly after peaking in the second half of 2016.

 

•  UK Interest  Rate decision  No change expected UK rates with a week to the UK Referendum on membership of the EU. CPI has been under pressure and there is a very low probability of interest rate hikes before 1Q 2017.  The press conference is always of interest.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.