FOREX News Today

European Outlook: Stock markets remain under pressure, with most Asian markets down and U.S. and U.K. stock futures also heading south. Risk aversion continues to dominate amid heightened uncertainty ahead of this week’s round of central bank meetings and next week’s Brexit referendum. The focus has shifted to the wider fallout for the EU and Eurozone spreads are widening sharply amid concerns that a U.K. exit from the EU would set a dangerous precedent. The European calendar focuses on inflation data, with U.K. CPI expected to nudge higher to 0.4% y/y from 0.3% y/y in April. Italy and Spain release final May inflation data, and the Eurozone has production numbers for April.

Brexit Polls push a volatile sterling: Three polls yesterday had the Leave camp ahead and the UK largest circulation newspaper (The Sun) openly came out in favour of a Brexit vote. The FT poll of polls now has Remain on 45% Leave on 47% and Undecided at 9%. Seven of the last ten polls have given the Leave camp the lead. UK government gilts have surged on the uncertainty as sterling falls. GBPUSD is trading below  1.4160, GBPJPY is below 150.00 and EURGBP has rallied as high as 0.7880.

US VIX equity volatility surged sharply since Friday considering the relatively mild drops in the S&P500 since then, indicative of heightened sensitivity to downside price action in stocks. The VIX had traded below 13.0 earlier in June to 2-month lows, but surged above 15.0 Friday to clear 17.0. Monday it gapped out above 18.0 to open at 18.24 and closed at the day high of 20.97 (up 23.14% on the day). Certainly it appears that hedging against downside risks via the VIX has proven popular with several major macro fund managers talking down stocks and up gold. That may be especially true after the June peak at 2,120 stopped just shy of all-time highs of 2,134 before touching a low of 2,085 today, while the 200-day m.a. is well south at 2,015. Brexit risks near-term, domestic terror acts and polarizing November elections further out, not to mention global growth risks, remain gusty headwinds for stock investors.

Fed Policy Outlook: No change in policy is expected from the FOMC two day meeting which starts later today, and the market has largely priced out much chance for a hike this year, according to Fed funds futures, which are also benefiting from flight to quality trades. The soft jobs report and lack of a hint from Yellen of an imminent policy shift indicate the FOMC will remain sidelined this week. Brexit uncertainties and fears of financial market instability should the U.K. vote for Brexit next week, along with weaker growth out of Japan and Asia have seen the futures push out a possible tightening until early 2017. The implied February future suggests a 50-50 bet on a 25 bp hike. We’re still expecting two hikes, with the FOMC acknowledging as much in its forecasts on Wednesday, though we note the Fed is running out of time if it wants to effect such action at a regularly slated meeting, since after Wednesday, there will be only four more, with the November 1, 2 dates seemingly out of the running given the elections.

Main Macro Events Today

• UK CPI Inflation in Britain is expected to have sped up slightly in May, but overall price pressures remain significantly subdued as both external and internal factors continue to weigh on consumer price growth. The annual rate of UK inflation is expected to have picked up to 0.4% in May, after slipping to 0.3% a month before, mostly on the back of an earlier Easter this year compared with the previous year. Core inflation, which strips out volatile prices of food and energy, is also seen edging up to 1.3% from 1.2% measured a month before.

• US Retail Sales US May retail sales data is out today should reveal a 0.6% (median 0.3%) headline increase with a 0.6% (median 0.3%) increase for the ex-autos figure as well. This follows April figures of 1.3% for the headline and 0.8% for ex-autos. The increase in May vehicle sales and our expectations for further gains in gasoline prices should help lift the headline

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: Asian stock markets declined in holiday thinned trade, following on losses on Wall Street and Europe yesterday. China and Taiwan were closed for a holiday. U.S. and U.K. stock futures are also down. Oil prices retreated, putting pressure on commodity companies and investors are holding back ahead of Chinese data releases over the weekend and the Fed meeting next week. More support then for core European bond futures, with 10-year Gilt and Bund yields already touching new record lows yesterday. Comments from ECB’s Jazbec, who confirmed the central bank’s wait and see stance, saying there is no need for new stimulus at the moment, may keep a lid on Bunds, however. The calendar has final German inflation data and French production numbers as well as Norway CPI data.

Japan tertiary Industry activity: A surprise rise in the level of services purchased by businesses for June to 1.4% near double expectations of 0.7%. The may figure was also revised higher to -0.5% from -0.7% April was -0.1%. USDJPY traded higher and is currently north of 107.00.

Brexit Would Undermine Europe’s Reform Prospects: The Brexit referendum on June 23 and the Spanish election on June 26 could well turn out to be decisive for the future of the EU, but also the monetary union. If the U.K. decides to leave and protest parties win the day in Spain, the chances of any real structural reforms in Europe will get ever more remote. At the same time a U.K. exit would set a dangerous precedent and play into the hands of protest parties in Germany, which are already calling for Germany’s exit from the Eurozone.

US Reports: revealed upside wholesale trade surprises and a tight round of claims figures that raised GDP prospects for both Q1 and Q2, and lifted our June payroll estimate to 210k from 200k. June payrolls will benefit from a reversal of May’s Verizon and weather distortions. We raised our Q2 GDP growth forecast to 2.6% from 2.4%, after a boost in Q1 GDP growth to 1.2% from 0.8%. We saw firm April wholesale inventory and sales data after a March inventory boost that left a second month of increases and a third month of stronger sales than inventories. For claims, we saw a 4k drop to a lean 264k that left a five-week string of declines that unwound elevated May levels.

Main Macro Events Today

• Canadian Employment We expect employment, to rise 5.0k in May after the 2.1k drop in April. May was a challenging month for Canada’s economy, with wild fires forcing the evacuation of Fort McMurray and shuttering oil sand production in the regions. Statistics Canada has not let on how these evacuations will be treated. Will they count the evacuated workers as not employed or will they just be excluded from the tally? Our projection assumes they will be excluded from the survey. If they are included in the survey, we could see a hefty decline. Unemployment is seen steady at 7.1%.

• University Of Michigan Consumer Sentiment The Preliminary release is expected to fall to 94.1 from 94.7 last month (which itself has revised down from 95.8). The April figure was 89.0. The IBD/TIPP Poll for the month fell to 48.2 from 48.7 but we except the Bloomberg Consumer Comfort measure to average a higher 42.7 in June.

Janne Muta

Chief Market Analyst

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

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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.

FX News Today

European Outlook: Asian stock markets headed south, with Japan underperforming as the Yen strengthened ahead of BoJ and Fed meetings. Weaker than expected machinery orders added to pressure. Chinese CPI was much weaker than expected and PPI better than expected adding to the raft of very mixed news. U.S. and U.K. stock futures are also heading south despite ongoing advance in oil prices, with the front end WTI future rising further above USD 51 per barrel. Released overnight the RICS U.K. house price balanced dropped more than expected and fell back to 19% in May, while April was revised down to 39.% from 41%. French non-farm payrolls were revised higher to show a rise of 0.3% q/q in Q1. Still to come, Germany and the U.K. release trade data but the focus will likely be on Draghi’s speech at the economic forum in Brussels.

RBNZ maintained the OCR at 2.25%, but maintained scope for further easing if economic data suggest the need. Governor Wheeler said, “Further policy easing may be required to ensure that future average inflation settles near the middle of the target range. We will continue to watch closely the emerging flow of economic data.” The move was anticipated, however, some analysts were suggesting a cut could be possible. The NZD soared on the news to a one year high with the NZDUSD currently trading at 0.7135.  Governor Whelers view on further easing later this year remains consistent and in line with many in the market including ourselves.

Bank of Korea cut rates by 25 bps to 1.25%, upending expectations for another steady 1.50% setting. The surprise cut was driven by concerns the government’s efforts to restructure indebted firms is weighing on the broader economy. A worsening outlook for the economic growth suggested that a rate cut would happen in the near term. The government’s plans to create a fund to facilitate corporate restructuring appears to have prompted them to add stimulus now as opposed to later as they sought to offset any negative impacts such as lost jobs or reduced investment.

US JOLTS report showed job openings rose 118k in April to 5,788k, matching the prior record high set in July 2015, after rising 62k to 5,670k in March (revised down from 5,757k). The rate rose to 3.9% from 3.8% (revised from 3.9%). But, the rest of the report wasn’t great. Hirings continued to slip, falling 198k to 5,092k after dropping 220k to 5,290k (revised from 5,292k). Also, the hire rate declined to 3.5% from 3.7%. Quitters dipped 36k to 2,912k after sliding 7k to 2,948k in March (revised from 2,980k). The rate fell to 2.0% from 2.1%. This report’s importance (it was created by and is a favorite of Yellen) for the June FOMC was minimized by the May employment release.

Main Macro Events Today

• ECB President Draghi Speaks Due to speak at the Brussels Economic Forum. Always one to watch, following last week’s press conference and yesterday’s initial corporate bond purchases expect more of the same “steady we go”.

• US Initial Jobs claims Following the hiatus caused by the NFP on Friday, expect this week’s initial jobless numbers to followed more closely than usual.  276k expected, median 270K.

Janne Muta

Chief Market Analyst

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

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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

Asian stock markets are mixed, with Japanese markets moving higher and oil producers gaining as oil prices moved higher, with the front end Nymex future trading above USD 50 per barrel. Chinese trade data showed imports beating estimates and saw the CSI move off earlier lows. US and UK stock futures are lower though, so overall positive leads for European bond markets, which moved higher yesterday, despite broad gains in equities. Gilt and FTSE 100 underperformed as Sterling bounced back from Monday’s drop. The European calendar has Swiss inflation data and UK production numbers. The ECB will start its corporate bond purchase program today, although officials this week indicated that buying may not amount to much.

The World Bank made a sizeable 0.5% cut on its 2016 global growth forecast from January estimation of 2,9% to 2.4%. The cut was made due to persistently low commodity prices, slow demand in advanced economies, weak trade and declining capital flows. Emerging market countries that live from commodity exports have found it hard to adapt to lower prices for oil, metals, and other commodities. According to the bank these economies are accounting for half of the downward revision.  The World Bank expects emerging economies to grow at a meager 0.4 percent pace in 2016, a downward revision of 1.2 percentage points from the January outlook.  Low commodity prices help the commodity-importing emerging market countries that are doing better. However, the benefits of lower prices on energy and other goods have been slow to show up. The World Bank now expects growth in commodity-importing countries will reach 5.8% which represent a downgrade of 0.1% from the January forecast.

Canada’s Ivey PMI fell to 49.4 in May from 53.1 in April on a seasonally adjusted basis, undershooting forecasts for a decline that would have left the index above 50.0 (median was 52.0). The pull-back leaves the Ivey at the weakest level of the year, and is below the most recent foray into contractionary (sub-50) territory in December of 2015 that saw the index fall to 49.9. But while the magnitude of the decline in May was unexpected, it was not shocking given the Fort McMurray fires during the month, and the concerns about the outlook for the region and the impact of stopped oil production on the national economy. Notably, the unadjusted Ivey PMI rose to 58.4 in May from 50.6 in April, revealing the typical move in this series between April and May. However, the index was well below the not seasonally adjusted 65.2 seen last May.

US consumer credit rose $13.4 bln in April following the $28.4 bln March surge (revised from $29.7 bln). Nonrevolving credit continued to pace the strength, posting an $11.8 bln increase versus the prior $17.9 bln jump (revised from $18.6 bln). Revolving credit was up $1.6 versus $11.1 bln (revised from $10.4 bln).

Main Macro Events Today

• UK Industrial Production: The YoY Industrial Production numbers for April are released today and are expected to come in slightly worse than in previous month (-0.4% vs. -0.2). Industrial production in the UK has been contracting since the cycle high in December 2013.

• Canada Housing Starts: We expect housing starts, due today, to slow modestly to a 190.0k unit rate in May from 191.5k in April, as starts continue to unwind from the 219.4k year high rate in February.

• RBNZ Interest Rate Decision: The Reserve Bank of New Zealand is expected to ease rates further. The Governor Wheeler said in a policy note that further easing may be required to ensure that future average inflation settles the middle of the target range. He has also expressed his wish for a lower dollar.

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.

FOREX News Today

UK retail numbers rebounded. According to the Confederation of British Industry’s monthly retail sales rebounded to +7 on CBI’s index. This was in line with expectations in a Reuters poll and up from -13 in April. April number was the lowest reading since the beginning of 2012. At the same time expectations for June fell to -5, the weakest month-ahead reading since mid-2013. According to the CBI orders placed with suppliers fell at the fastest pace since March 2009.

RBA remained put. The Reserve Bank of Australia keeps the rates at record low levels at 1.75% as it sees sustainable growth in the economy. The bank regards the current policy consistent with the economic situation. The decision was widely expected but still AUD rallied against all the major counterparts except CAD. While Australian dollar lost 0.1% against CAD it gained 2% against JPY. In the light of this wording from the central bank it appears that further rate cuts aren’t likely. However, should the economic conditions worsen RBA surely will consider further rate cuts.

The UK “Remain” campaign that supports the idea of staying in the European Union has a narrow one-point lead over the “Leave” campaign, according to a YouGov poll for the Times posted Monday. According to the latest YouGov poll 43% of respondents intend to vote to keep Britain in the EU, while 42% support an exit vote in the referendum. Britons will vote on June 23 on whether to remain in the 28-member bloc.

Chair Yellen didn’t provide any fresh insight on the timing of the next rate hike, leaving the door open for action over the next several months. Fed Chair Yellen reiterated gradual funds rate hikes are likely appropriate if conditions met, including labor market strengthening and rising inflation. Giving a nod to Friday’s employment report, she warned “one should never attach too much significance to any single monthly report.” Nevertheless, it’s still an important indicator and the Fed needs to monitor the conditions carefully, she added. Generally she noted that overall labor market developments have been quite positive, though she also cited several negatives, including high unemployment rates among various minority groups. Elsewhere, she believes foreign financial and economic conditions have stabilized. That she sees positives outweighing the negatives, the FOMC will remain on course for more normalization this year, and we still see July very much on the table. Fed takes its mandate and objectives from Congress, she said, in answering a question on whether the FOMC’s primary concern is GDP growth and the unemployment rate over the next few quarters, relative to the degree the Fed looks at the negative effects of low rates (including risk taking behavior). She also stressed the Fed not only looks at the near term, but at the medium and longer terms as well.

Main Macro Events Today

• Euro Area GDP: Eurozone Gross Domestic Product numbers are out today and are expected to come in unchanged from the previous numbers. The QoQ GDP change is expected to come in at 0.5% and YoY at 1.5%.

• US Non-Farm Productivity: The report on the US Non-Farm productivity for the first quarter 2016 is due today and is expected to improve from -1.0 to -0.6. Over the recent years productivity has improved towards the year end after a decline in the first half of the year.

• Canada Ivey PMI: A slight decline is expected in Canada May Ivey Purchasing Managers Index. The numbers are expected to ease from 53.1 in April to 52 in May.

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.

FOREX News Today

FX Update: Narrow ranges have prevailed among the dollar majors and other currency pairings as markets hunker down into the release of the May U.S. jobs report today. The yen has remained firm with USDJPY edging out an 18-day low of 108.49, surpassing yesterday’s low by only 3 pips. The yen has been trading firm since Wednesday’s announcement by Japanese PM Abe’s of “bold economic measures” later in the year, along with a bigger delay than anticipated in the planned sales tax hike (to at least 2019), which seemed to suggest a shift in policy toward fiscal and away from monetary. Elsewhere, EURUSD has seen barely more than a 15 pip range centred around 1.1150, settling after yesterday’s short-lived foray above 1.1200. The U.S. employment report will arrive today with recent data having failed to ignite expectations for a Fed rate hike as soon as June 15. We’re forecasting a 190k increase in nonfarm payrolls, but note risk is to the downside (the median forecast is for a 150k headline). Hourly earnings and average workweek components will be watched closely as they’re also key to the FOMC’s decision, while the unemployment rate is seen ticking down to 4.9% from 5.0%. Unless we see an outcome near to our forecast, or above, the dollar will likely take a tumble.

European Outlook: Bund and Gilt futures managed robust gains yesterday, as Draghi left the door open for further easing, although the lack of further measures in the pipeline left stock markets little changed at the end of the day. FTSE 100 stock futures are slightly higher, and Asian equity markets also managed slight gains, but U.S. stock futures are down and trading remains cautious ahead of U.S. jobs data. Today’s European calendar has final Eurozone Services PMIs and the first reading of the U.K. Services PMI as well as Eurozone retail sales, but it is the Brexit referendum that is starting to cast a big shadow over markets and keeps investors cautious. Oil prices are also little changed, with the front end WTI future holding slightly above USD 49 per barrel.

ECB – Nothing New in the Pipeline: The ECB not only maintained interest rates today, but also implicitly confirmed that it is putting all its hopes on the measures already announced, but yet to be implemented, and that nothing new is in the pipeline. True, the door to additional measures stays open and especially the Brexit referendum remains a near term, but also medium term risk that could spark turmoil and put a strain not just on financial markets, also the European Union and ultimately EMU. Still, in the central scenario the ECB seems done, with the ball firmly in the court of governments now, to push on with the structural reforms necessary to complement the accommodative monetary policy.

Fedspeak: Dallas Fed’s Kaplan: raising rates in June or July is getting to the point where it makes sense, said the moderate non-voter, who noted that inflation picked up in the past 3-months and GDP is seen near 2% this year. He sees room for the labor force participation rate to improve, but notes we’re “pretty darn close” to full employment. Kaplan expects the labor force participation rate to fall in the next 10-years to 61%, however, due to demographics. Overall, this is relatively hawkish, though not out of line with recent Fedspeak.

Main Macro Events Today

• US Employment data NFP May employment data is out today and should reveal a 190k (median 155k) headline which would follow 160k in April and 208k in March. We expect the unemployment rate to tick down to the prior cycle low of 4.9% (median 4.9%) from 5.0% in April and March. There is downside risk to the release from the higher initial claims average for the month and the drop in producer sentiment.

• US Non-manufacturing ISM The May ISM-NMI is also out today to close out the May producer sentiment releases. We expect a headline decline to 55.0 (median 55.3) from 55.7 last month and 54.5 in March. Most other measures of producer sentiment declined for the month so there is some downside risk to the release as we discuss in our May 23 commentary but the ISM managed to increase to 51.3 from 50.8 in April.

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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

FX Update: The dollar has trader softer today, which has driven EURUSD to a one-week peak at 1.1213 and USDJPY to a two-week low at 108.83, although some yen outperformance was a factor in the latter. The yen rallied with as the mood in most stocks markets in Asia remained cautious, while currency strength in turn exacerbated losses on the Tokyo Stock Exchange. The Nikkei 225 underperformed the region notably with a 2.3% loss. The longer-than-anticipated delay to the planned sales tax hike, announced by PM Abe yesterday, was held as a yen bullish view by some, though this shouldn’t affect BoJ policy considerations given disinflationary pressures and with the central bank holding two of the “three arrows” in the Abenomics stimulus plan. A Reuters survey two weeks ago found a strong consensus favouring the BoJ to expand policy by July, via the QQE program and possibly by a deepening of NIRP. Two big external events are approaching, the first being the ECB’s June policy meeting today, and the next being the release of the May U.S. payrolls report tomorrow. The former is not likely to be a market shaker as the central bank is an affirmed wait-and-see stance. The latter will be looked to in context of Fed tightening possibility at the upcoming FOMC on June 14th-15th. The general view at the moment is that after indifferent U.S. data this week, and given Brexit vote in the UK on June 23, the Fed will delay the decision until the FOMC in July.

European Outlook: Oil prices are under pressure and the front end WTI future below USD 49 per barrel ahead of the OPEC meeting. U.K. stock futures are posting small gains, but U.S. futures are also down and leads remain supportive for European bond futures, which already moved higher yesterday, with Gilt futures outperforming. Bund traders were cautious ahead of today’s ECB meeting, with Draghi unlikely to strengthen the dovish message at the moment and instead focus on putting further pressure on governments to implement reforms to complement the accommodative policy.

Poor Global manufacturing PMI’s: Although U.S. data revealed encouraging May gains in the ISM, to 51.3 from 50.8, and in vehicle sales, which we now peg at a 17.6 mln rate from 17.3 mln in April. Unfortunately, we also saw an April pull-back in construction spending after upwardly-revised Q1 gains that lowered GDP growth prospects on net, though we now assume a Q1 GDP boost to 0.9% from 0.8%. The April construction drop likely reflects some give-back of a winter weather-boost, and we still assume a solid spring-season for housing given April strength in pending, new and existing home sales. The PMI data from Asia and Europe was also weak with on the UK showing a move forward.

Canada Q1 GDP disappoints: Disappointing but not Disastrous: Canada’s 2.4% real Q1 GDP gain undershot relative to expectations. While the 0.2% m/m drop in March GDP left a poor hand-off for Q2 GDP, a contraction had already been factored in for that quarter due to the halt in oil production. Hence, Q1 and March GDP do not alter the underlying growth story for Canada in 2016, although the Q1 performance does suggest and even longer path back to sustainable growth than had been previously assumed. The longer wait implies an even more drawn out period of time at currently accommodative rates from the Bank of Canada.

Main Macro Events Today

• ECB Meeting & Press Conference  The central bank is widely expected to keep policy on hold at today’s council meeting, leaving the focus on Draghi’s press conference and the updated set of staff projections. We don’t expect a big change to the inflation forecasts, but the growth forecast for this year could be lifted after stronger than expected first quarter growth numbers. Draghi’s overall message though is likely to be the same as the last time around: The ECB is firmly in “wait-and-see” mode and focused on implementing the measures already announced, with the corporate bond purchase program starting this month. The ECB leaves the door to further easing open, but is unlikely to step up the dovish message, as council members increasingly shift the focus to the need for government action and structural forms to complement the ECB’s accommodative policy stance and help lift long term growth potential.

• BOE’s Governor Carney speech The new GBP five pound note is being unveiled and the Governor is due to speak, Brexit will inevitably be raised with reporters hanging on to any reference for policy implications.

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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

Sterling remains under pressure on new Brexit polls that showed a swing in support for the Leave campaign. The FT’s Brexit poll tracker is now showing 46% in favour of Remain and 43% in favour of Leave, versus respective figures of 46% and 41% that were being shown yesterday morning (London time). Bookmaker Ladbrokes are now reporting 75% of all Brexit bets are in favour of the UK remaining in the EU, down from 79% seen yesterday morning and off from the 81% level seen at the end of last week. At the same time in Japan PM Abe announced a two-plus year delay in the planned sales tax hike (which had been scheduled for April next year), raising concerns about fiscal sustainability although a widely anticipated move.

China’s manufacturing PMI was unchanged in May at 50.1, while the Caixin/Markit index slipped to 49.2 from 49.4. Those numbers are disappointing and could leave a bearish tone in equities. Though the manufacturing PMI is above the 50 expansion-contraction mark for a 3rd straight month, it’s been on a softening trend since mid 2014 and will add to worries over a growth slowdown. The non-manufacturing PMI slipped to 53.1 from 53.5. Also, the Caixin manufacturing PMI dipped to 49.2 from 49.4. That’s where it was a year ago. It’s a 15th consecutive month in contraction.

Switzerland’s economy expanded sluggishly in the Q1 2016 as government spending fell for the first time in 12 months. The slowdown to 0.1 % followed a period of expansion of 0.4% in the last quarter of 2015 and was less than the 0.3 % growth that economists forecasted. The report published by the State Secretariat for Economic Affairs in Bern also showed that government spending dropped 0.8 %.

Atlanta Fed’s GDPNow estimate remained at 2.9% for Q2 unchanged from the last reading on May 26 after taking the measure of the personal income report this morning: “The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.9 percent on May 31, unchanged from May 26. The second-quarter forecast for real consumer spending growth remained at 3.6 percent after this morning’s personal income and outlays release from the U.S. Bureau of Economic Analysis.” See the Atlanta Fed GDPNow website for more insight.

Yesterday’s US reports revealed a hefty 1.0% April surge for consumption that beat estimates and dominated the day’s headlines, alongside a largely expected 0.4% April income rise, and disappointing May declines for the Chicago PMI to 49.3 from 50.4, for the Dallas Fed index to -20.8 from -13.9, and for consumer confidence to 92.6 from 94.7 (was 94.2). The big April spending surge lifted our Q2 GDP forecast to 2.6% from 2.0%, with a solid 3.47% (was 2.3%) Q2 growth clip for real consumption. Output is rebounding in Q2 as we approach the end of the inventory headwind, despite the day’s ugly confidence and sentiment setbacks for May.

• Euro Area Manufacturing PMI: Eurozone Manufacturing PMI numbers for May are out today and are expected to be confirmed unchanged at 51.5. Manufacturing PMI has fallen from 53.2 to 51.5 in 2016.

• UK Manufacturing PMI: While UK manufacturing PMI high in 2015 was 55.5 the current numbers are considerably lower. Today’s release is expected to confirm the number at 49.6 which would be an improvement from April’s disappointing number of 49.2.

• US Fed’s Beige Book: Fed’s Beige Book for the month of May is published today. Markets look forward to this publication in order to gain insights on Fed’s thinking process in terms of the future interest rates policy.

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FX News Today

European Outlook: Asian stock markets are mostly higher and U.S. and European stock futures also remain underpinned. This should keep pressure on Bund futures, which moved sideways in after hour trade yesterday after a declining sharply during the main session. Gilt futures could underperform in catch up trade, after yesterday’s holiday. The European calendar is again very busy, with German retail sales at the start of the session, followed by German and EMU unemployment data. The focus will be on the next set of preliminary May inflation numbers from France, Italy and for the Eurozone as a whole. After the higher than expected German number we see Eurozone HICP lifting out of negative territory to 0.0% y/y (med -0.1%) from -0.2% y/y, thus backing the ECB’s wait and see stance ahead of Thursday’s council meeting.

Japanese sales tax announcement: As Japanese housing starts rise the most in 10 months with a 9.0% y/y rise compared to expectations of only 3.9% all eyes are on PM Abe and the expected announcement in the sales tax hike that was due next year. Mr Yamaguchi (the coalition partner of the PM) is due to speak with the press later today. Mr Abe met with his with Finance Minister Mr Aso (who opposes the postponement of the sales tax) yesterday in a bid to rearranged summer elections for support of the sales tax deferment. The “will they wouldn’t they” has helped the continued easing of the yen with USDJPY trading at 111.28 and GBPJPY 163.26.

Australian Data: A poll by Bloomberg of 27 economists has raised Australian Q1 GDP to 0.8% from 0.6%.  Exports fared much better than expected and building approvals were significantly better than expected coming in at 3.0% whilst expectations were for a 3.1% decline.  Balance of payments missed expectations but private sector credit held up and was a slight improvement net at 0.5% from last month’s 0.4%. The AUD has reacted positively to the raft of good news with the AUDUSD rallying to the 0.7250 handle, next stop the Daily 200 DMA at 0.7260.

Fedspeak:  St Louis Fed’s Bullard did not comment on policy or the economy in the text of his rather academic talk on “Incomplete Credit Markets and Monetary Policy with Heterogeneous Labor Supply,” at a Bank of Korea event. In Q&A, however, the voting president confirmed his desire that policy remains dependent on the data. Hence he said he’d like to reserve judgement on the June 14, 15 outcome, especially as there are a lot of key numbers on the immediate horizon. He was mildely encouraged by the revised GDP number on Friday, where growth was bumped up to 0.8% from 0.5%. The global markets should be well prepared for a possible hike. We suspect Bullard will vote for a rate increase next month if the data don’t disappointing.

Main Macro Events Today

• EURO Area CPI We are looking for Eurozone headline inflation to lift to 0.0% y/y  from -0.2% y/y in the previous month. German data yesterday came in a tad higher than originally expected, confirming that the drop back last month was largely due to base effects connected to the earlier timing of Easter this year, which saw holiday related prices peaking in March, rather than April and thus added to the variation over the March/April period. In any case, expectations for a gradual rise in the headline rate remain intact and with the ECB firmly in wait and see stance and focused on implementing the measures already announced, the HICP rate this month will not have much of a bearing on the discussion on Thursday.

• US Consumer Confidence  May consumer confidence is out on Tuesday and should reveal an increase to 95.0 (median 96.0) from 94.2 in April and 96.1 in March. This compares the already released Michigan Sentiment data for the month which revealed a headline increase to 95.8 from 89.0 last month and the IBD/TIPP poll which increased to 48.7 from 46.3.

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 major currencies have traded without direction with markets hunkered down into Fed chairwoman Yellen’s speech later today, and ahead of the long U.S. holiday weekend. The dollar has lost its rallying impetus, tracking a decline in U.S. Treasury yields as markets take a more circumspect view of Fed tightening prospects. USDJPY has consolidated in the mid-to-upper 109s after failing to sustain gains above 110.0 this week. Japanese inflation data showed core CPI remained unchanged in April at -0.3% y/y, slightly above the median for -0.4% y/y. The BoJ’s has been (forlornly) targeting core CPI at 2%. The data didn’t impact markets much but will cement expectations for the central bank to expand policy by July. EURUSD has traded a narrow range near 1.1200, above the 10-week low seen on Wednesday at 1.1129. Commodity currencies have settled after recent gains. Oil prices have corrected from the seven-month highs seen yesterday. Asian stocks have mostly gained today. Data out of China showed industrial profit growth decline to +4.2% y/y in April, down from 11.2% in the prior month.

G7 News from Japan: Topics ranged from North Korea, Russia,  & China to skirting around the FX situation and vowing to pursue economic growth. “Global growth remains moderate and below potential, while risks of weak growth persist,” the G7 leaders said after a two-day summit in central Japan. “Global growth is our urgent priority.” Japanese Prime Minister Shinzo Abe has been playing up what he calls parallels to the global financial crisis as growth in his country sputters.

US Data Releases; some strong, some weaker:  US reports revealed a 3.4% April durable goods pop and a welcome 10k drop in initial claims to a respectable 268k that further unwound the early-May spike to a 294k one-year high. The component data for the durables report were weaker than expected, however, leaving a mixed set of data for the day, and we’ve lowered our Q1 GDP growth estimate to 1.0% from 1.1% in today’s release, versus the 0.5% advance figure. We still expect an inventory-restrained 2.0% GDP growth clip in Q2 with a 3% pace for real equipment spending, despite a disappointing 0.8% April decline for ex-transportation equipment orders, and we still peg the May nonfarm payroll rise at 190k.

Fedspeak:  Powell – said another rate hike could be seen “fairly soon,” in the text of his speech on “Recent Economic Developments, the Productive Potential of the Economy and Monetary Policy.” We seldom hear comments on policy or the economy from this Fed official, so his near term forecast is important. However, he wants to see a “significant strengthening in growth” in Q2, including further strong job gains and declines in the unemployment rate and other measures of slack, along with increases in wages. Should data support his expectations, he is in favor of gradual rate increases. He noted the asymmetric risks of zero rates, headwinds from weak global demand and geopolitical events, a lower long-run neutral funds rate, and the “apparently elevate sensitivity of financial conditions to monetary policy.”

Main Macro Events Today

• Yellen to speak at Havard As we reported on Monday the highlight of Fedspeak this week. Her colleagues have been fairly consistent in talking up a rate rise at either the June or July meetings. As Chair and chief moderator she is never as direct as some on the FOMC and is unlikely to stray far from that today. However, her speech and interview with renowned Keynesian economist Greg Mankiw will be followed closely.

• US GDP  Expectations are for 0.7% Q1 rise and for the Annualized figure to be revised up to 0.9% (median- although we expect 1.0%) from 0.5%.

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.