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Pound flat ahead of Financial Stability Report

Pound flat ahead of Financial Stability Report

GBP
Newly appointed MPC member Jonathan Haskel’s inaugural testimony was widely interpreted as “dovish”. As he replaces a known hawk, Ian Mccafferty, who steps down after the August meeting, this was to be expected. Haskel’s expertise in productivity meant he had doubts around the high number of the employed with too few or uncertain hours, leading to stagnant wage growth – a driver for the interest rate decision. The Pound lost down 0.50% to settle around the 1.3200 mark against the US Dollar.

The upcoming EU Summit and Brexit news will be the main risk events as we move towards the end of this week.

USD

The Greenback keeps up the erratic performance so far this week. This comes as investors remain vigilant on the developments from the US-China-EU trade front, at the same time prompting the sentiment to remain biased towards the risk-off trade.

Adding to the downbeat mood around the buck, yields of the key US 10-year note area dropped to fresh lows in the 2.85% neighbourhood, a level last seen in late May. US Federal Reserve member P.Navarro tried to calm the markets’ concerns saying that there were no US plans to impose investment restrictions.

In the US data space, May’s Durable Goods Orders and advanced Goods Trade Balance are coming up next along with speeches by Federal Open Market Committee’s R.Quarles and E.Rosengren.

EUR

EURUSD is hovering around the mid 1.1600s as investors hesitate to take directional bets.

Sentiment has been driven mainly by trade wars, retaliation and absent relevant releases/events in Europe.

Looking ahead, market focus is on the two-day EU summit starting tomorrow. The event could pose some headline risk to the Euro, as it will cover many controversial issues including migration, a European fiscal budget, the Italian fiscal risks, and Brexit.

Data to Watch:

08:00 EUR Non-monetary policy’s ECB meeting
09:00 CHF ZEW Survey – Expectations (Jun)
09:30 GBP BOE’s Governor Carney speech
09:30 GBP Financial Stability Report
13:30 USD Durable Goods Orders (May)
13:30 USD Durable Goods Orders ex Transportation (May)
14:00 CHF SNB Quarterly Bulletin
15:00 USD Pending Home Sales (MoM) (May)
16:00 USD Fed’s Quarles speech
17:15 USD Federal Reserve Bank of Boston President Rosengren Speech
20:00 CAD BoC Governor Poloz Speech
22:00 NZD RBNZ Interest Rate Decision
22:00 NZD RBNZ Rate Statement

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