Thursday, June 2: Five Things the markets speak of
the investors seem to have upped the ante on the forehead of caution before key meetings of the European Central Bank (ECB) and the OPEC in Vienna, Austria, today.
The aversion strategies for risk dominated market movements in the classes of variables active in the overnight session.
Global equities have trouble finding some traction; the dollar is under pressure against its level pairs I (EUR, JPY and GBP) and yield debt are falling.
Today's events could be regarded as an appetizer before the main course tomorrow - U.S. non-farm employment (NFP). Investors will be disappointed
Currently, event risk is that for all the speculation about what may come out of these meetings ?; the reality may be the end result may be little changed.
1. forecasts of the ECB advice on the development of the policy
The European Central Bank (ECB) will announce its final decision to rate interests before the US open followed by a news conference with ECB President Mario Draghi.
Most analysts expect no major announcements, focusing on the implementation and evaluation of measures already announced. However, there are certainly strong market speculation that the Euro inflation forecasts may be revised upwards, if any, that could change the dynamics of their quantitative easing program.
If there is a leaning towards the possibility of tapering QE and is an outside if the EUR bears are expected to come under immediate additional pressure - EUR / USD is up + 0 2% to € 1.08
consensus is that Draghi will follow the party line and focus on "low or lower rates for longer" and expect the Fed to do most of the heavy lifting . This could be a time that future Fed Funds probability of a move in June continues to slide and is now registered below 20%.
2. Can OPEC surprise?
The expectations of a consensus at the current meeting of retransmission could hardly be lower. There are too many moving parts and significant self-interest to overcome.
Crude oil prices have tried to rally in late trading yesterday after US reports that OPEC is working on an agreement that could accommodate Iran as it ramps up production to pre-sanction levels. Even a ceiling for the production was under consideration.
However, even the time for a new progress report has surfaced so far, another member of the interest seems to quickly crush the potential of what is happening.
There are a number of reasons that many observers announced the death of OPEC. Saudi to have refused to act as "swing" producer; they prefer to act on them then there is the rise and existence of non-OPEC producers "strategy of market share." - The Americans shale producers contributed to the collapse of crude prices. Global demand continues to be a problem or is it?
Do not help last night crude oil prices were the API inventory figures showing a surprise build for the first time in three weeks. US weekly crude inventories rose to + 2.350m -5.137m of the previous week.
3. Does Japan away from currency manipulation?
The Yen touched a new high of two outright weeks (¥ 108.93) earlier this morning after PM Abe announced yesterday delayed its planned second increase in tax sales planned for April 2017
Some traders looking to this latest move by the PM of Japan as a financial step that could undermine the most aggressive moves of the BoJ policy in the second half of the year, to especially as their economies tackles headwind likely Q2 contraction because of their impact on earth shake last.
With Abe planning to pass a new fiscal stimulus plan this fall (no details), yen bears' believe this signals a transition from a multi-year policy of monetary easing by the BoJ conducted - between 2012 -2105 the yen fell almost 40% against the dollar.
More fiscal stimulus does not necessarily require aggressive monetary stimulus in the future or not? The BoJ, like other central banks Level I have been hoping or expecting that the Fed would take the lead on higher rates. This will take the heavy lifting off the respective central banks.
non-farm payrolls tomorrow (NFP) should go a long way to determine if the U.S. economy is strong enough to support an increase in the Fed rate in the coming months. Higher rates are expected to support the dollar as the currency becomes more attractive to yield-seeking investors -. particularly limited NIRP investors
4. GBP likely to face headwinds
It's been a difficult week for the pound . He was rushed by all Brexit polling referendum release and bookmakers odds. EU to stay or leave referendum three weeks and investors can expect any relaxation in foreign exchange movements in the near future.
Already this week, the month-end requirements, the new positioning Brexit and technical resistance / support (GBP / JPY 164.00 and EUR / GBP € 0.7575) levels were able to trigger a plethora of stop orders -loss of the pound against the majors.
in the last three sessions, GBP is trading down -3c (£ 1.4430) for not achieving outright high last week of £ 1.4740. The book is considered highly vulnerable enough after recently won a lower risk of a vote in the UK charged for leaving the EU on June 23. Recent surveys and chances of bookmaker continue to the streets hand, but the gap is closing.
earlier this week, the spread betting William Hill said that + 85% of paris referendum on the rental of the Bank last weekend was to "leave", which forced them to shorten their chances "quit". While the last ORB / Telegraph survey also shows closing the gap - 51% to stay É.U (+ 55% against May 23) and + 46% for letting (against + 42%).
5. Will jobless claims stop falling before NFP?
Excluding risk of further events (Brexit) for Fed watchers the next two days of US economic releases will be essential to determine if a Fed rate increase on the table in a few weeks.
All eyes will naturally be on the US employment report tomorrow May (+ 159K e), but first, the Labor US Department this morning will release its latest data on complaints unemployed and then there is the ADP non-farm employment report (174 th) at 08:15 EDT. The claims relate to 0: 830am EDT is closely monitored, but is also considered a "proxy" for volatile layoffs throughout the US economy.
The consensus expects + 270K new applications (in the week ended May 28). This would indicate a + 2k increase the previous report and breaking two consecutive weeks of declining claims.
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