Today brings the busiest day of the week in terms of key economic and political events. Market focus will not least be on the ECB meeting today and potential changes to its forward guidance. However, we do not expect the ECB to make any changes to avoid the risk of unwarranted tightening of financial conditions and instead just introduce a more hawkish tone in the post-meeting statement (see also ECB Preview: Hawkish tone but tightening far out , 6 June 2017).
In the UK, all eyes will be on the general election with exit polls released at 23:00 CET. The Conservatives' lead in the polls over Labour has narrowed significantly over the past couple of weeks, increasing the risk of a hung parliament. Our main scenario remains that Theresa May wins - however, her margin of victory will be decisive in determining her vulnerability to hardline Brexiters and hence her flexibility in the upcoming Brexit negotiations (see also Research UK - Travel notes: a Theresa May win would be GBP positive , 7 June 2017).
In the US, former FBI director James Comey will testify before the Senate Intelligence Committee at 16:00 CET, where focus will be on any new revelations about his sudden dismissal on 9 May following disagreements with President Donald Trump about the FBI's Russian probe.
In Scandinavia, manufacturing production data in Norway is due to be released, which we estimate will show a solid rebound of 2.0% m/m in April, after the weak reading in March.
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