Market Brief
European equity markets stabilised yesterday, despite escalating tensions between Greece and its creditors. Alexis Tsipras, Greece Prime Minister, declared that the bailout plan presented was “humiliating for our people.” This declaration is representative of the permanent disagreement between the two parties. Moreover, the complete lack of progress and the absence of a common will to make compromises have increased dramatically the probability of a Greek default, despite intense negotiations over the past few days.
Asian equity returns are mostly trading in positive territory after a choppy morning. Chinese shares are recovering this morning after a massive drop the previous day. The Shanghai Composite is up 0.66%, while its tech-heavy counterpart, the Shenzhen Composite, recovers 0.75%. In Hong-Kong, the Hang Seng gains 0.91% despite mass protests against electoral reforms. In Japan, the Nikkei losses 0.19% after Japan’s trade balance surprised the market on the upside at -¥182.5bn (s.a.) in May versus -¥184bn expected. Exports came in slightly below expectations at 2.4%y/y versus 3% expected, while imports printed at -8.7%y/y versus -7.5% median forecast, thanks to competitive devaluation.
In UK yesterday, GBP/USD suffered a tiny sell-off after May CPI figures broadly matched expectations. Nevertheless, Core CPI printed below median forecast at 0.9%y/y versus 1%, while retail price index came in at 1%y/y versus 1.1% consensus. All in all, inflation pressure remains subdued and is expected to remain as it is until Q3. April/May labour market data are due today, with the ILO unemployment rate expected stable at 5.5%. The BoE will release the minutes of its previous meeting. GBP/USD is gaining momentum and is on its way back to 1.57. Closest support and resistance remain the same at 1.5569 and 1.57, respectively.
Obviously, the big event today is the release of FOMC statement accompanying the rate decision, which will also be followed by a press conference held by Fed Chairwoman Janet Yellen. Like many, we do not expect a lift off today. The Fed is expected to revised lower its GDP forecast for 2015, as the recovery in the US has not been as explosive as anticipated by most market participants. As a result, we do not expect much volatility today as traders consolidate their positions. EUR/USD moves slightly higher this morning, but remained mostly range-bound for the past few days. The euro sits currently on the mid-term support standing at 1.1265 (Fib 38.2% on Dec 14 – March 15).
In Australia, Westpack leading index fell -0.1% in May while previous read was revised lower from 0.1% to 0%. AUD/USD is right in the middle of its 1-week range (0.7680-0.7780). Despite this disappointing headline, Australian shares are up 1.08%.
In Europe, equity futures are in green this morning, recovering from yesterday’s correction. The DAX is up 0.48%, CAC 0.25%, Euro Stoxx 0.35%, SMI 0.12% and the Footsie 0.28%.
Today, traders will also CPI and retail sales from South Africa; Zew survey from Switzerland and tax collection and formal job creation from Brazil.
Today's Calendar Estimates Previous Country / GMT SW Jun Manufacturing Confidence s.a. 100.6 100.5 SEK / 07:00 SW Jun Economic Tendency Survey - 101.4 SEK / 07:00 SW NIER Publishes Economic Forecasts (Table) - - SEK / 07:15 SW Apr Service Production MoM SA - -0.10% SEK / 07:30 SW Apr Service Production YoY WDA - 2.90% SEK / 07:30 IT Apr Trade Balance Total - 4060M EUR / 08:00 IT Apr Trade Balance EU - 487M EUR / 08:00 SA May CPI Core MoM 0.20% 0.30% ZAR / 08:00 SA May CPI Core YoY 5.60% 5.60% ZAR / 08:00 SA May CPI YoY 4.50% 4.50% ZAR / 08:00 SA May CPI MoM 0.30% 0.90% ZAR / 08:00 UK U.K. Claimant Count Inc. Universal Credit from this Release - - GBP / 08:30 UK May Claimant Count Rate 2.20% - GBP / 08:30 UK May Jobless Claims Change -13.8K -6.5K GBP / 08:30 UK Apr Average Weekly Earnings 3M/YoY 2.10% 1.90% GBP / 08:30 UK Apr Weekly Earnings ex Bonus 3M/YoY 2.50% 2.20% GBP / 08:30 UK Apr ILO Unemployment Rate 3Mths 5.50% 5.50% GBP / 08:30 UK Apr Employment Change 3M/3M 190K 202K GBP / 08:30 UK Bank of England Minutes - - GBP / 08:30 EC Apr Construction Output MoM - 0.80% EUR / 09:00 EC Apr Construction Output YoY - -2.70% EUR / 09:00 SZ Jun Credit Suisse (SIX:CSGN) ZEW Survey Expectations - -0.1 CHF / 09:00 EC May CPI MoM 0.20% 0.20% EUR / 09:00 EC May F CPI YoY 0.30% 0.30% EUR / 09:00 EC May F CPI Core YoY 0.90% 0.90% EUR / 09:00 US Jun 12 MBA Mortgage Applications - 8.40% USD / 11:00 SA Apr Retail Sales Constant YoY 2.10% 2.00% ZAR / 11:00 SA Apr Retail Sales MoM -0.30% -0.50% ZAR / 11:00 BZ Apr Economic Activity MoM -0.40% -1.07% BRL / 11:30 BZ Apr Economic Activity YoY -2.50% 0.54% BRL / 11:30 CA Apr Wholesale Trade Sales MoM 0.30% 0.80% CAD / 12:30 BZ Currency Flows Weekly - - BRL / 15:30 US Jun 17 FOMC Rate Decision (Upper Bound) 0.25% 0.25% USD / 18:00 US Jun 17 FOMC Rate Decision (Lower Bound) 0.00% 0.00% USD / 18:00 US Fed Chair Yellen Holds Post-FOMC Press Conference - - USD / 18:30 BZ May Formal Job Creation Total -53282 -97828 BRL / 22:00 BZ May Tax Collections 94000M 109241M BRL / 22:00 CH May Foreign Direct Investment YoY CNY 8.00% 10.50% CNY / 22:00
Currency Tech
EUR/USD
R 2: 1.1534
R 1: 1.1385
CURRENT: 1.1271
S 1: 1.0882
S 2: 1.0521
GBP/USD
R 2: 1.5879
R 1: 1.5800
CURRENT: 1.5641
S 1: 1.5191
S 2: 1.5090
USD/JPY
R 2: 135.15
R 1: 125.64
CURRENT: 123.69
S 1: 122.03
S 2: 118.18
USD/CHF
R 2: 0.9712
R 1: 0.9573
CURRENT: 0.9237
S 1: 0.9072
S 2: 0.8986