Waiting on a sign
There is no two ways about it; yesterday was a dull day and the overnight session has done little to make my trousers roll up and down.
Dollar rallies are going to be a factor of life in the lead in to the June Fed meeting and movements in US bond markets have given the greenback a little juice in the past 24hrs. Weakness in commodity markets is helping matters with AUD and NZD both lower on iron ore price falls and Chinese weakness respectively.
Carney to reload on Brexit
Today however should be an interesting day and if there is one thing this week that could strengthen the pound it’s the testimonies of Bank of England members Carney, Weale, Broadbent and Vlieghe to the Treasury Select Committee. The inflation report of a fortnight ago was seen as a turning point of the Referendum as Carney and co weighed in on the damage that the Bank of England believes that a Brexit from the European Union could cause.
The Treasury Select Committee has a few Brexiteers within its ranks and the best way to make money from financial markets today may be selling tickets to the inevitable ding-dong between Governor Carney and Conservative MP Jacob Rees-Mogg. Expect Carney and the other MPC members to double down on his pronouncements of risk to the UK economy and possible recession in the event of the UK leaving the EU.
They kick off proceedings at 10am.
Japanese signal intervention markers
Japanese Finance Minister Taro Aso said overnight that a 5-yen move in either direction over 2 days would be considered one-way and lopsided. This goes some way to backing up our belief that it is as much the speed of the move as the direction in yen crosses that will have the Bank of Japan looking for the big button marked ‘intervention’. Yen has traded in a very tight range overnight despite the strengthening USD with little expected to move it through today’s session.
Europe bubbling along slowly
The main focus for the single currency today will be the German ZEW (a reading of German financial market stability) which is expected to show a modest improvement in future expectations. Yesterday’s run of PMIs from the Eurozone confirmed what we already knew; growth is modest and weak and inflation pressures are very few and far between.
Away from these points we wait on the inevitable polling and nonsense that both referendum campaigns have slipped into.