USA

The USD gained ground yesterday as a plethora of Fed members, including Chair Yellen, struck relatively hawkish tones regarding the outlook of the US economy and the future of rate hikes in the US economy. Yellen, reiterates the need for a gradual approach to rate hike, while other members also focused more on raising rates rather than keeping them unchanged or cutting them. Data out of the US was slightly negative, with the Continues Claims count coming in at 2161k vs 2120K and the Initial Jobless claims coming in worse than expected at 294k vs 270k.

Upcoming data from the US is as follows:

  • Core Retail Sales m/m expected at 0.6%
  • PPI m/m expected at 0.3%
  • Retail Sales m/m expected at -0.3%
  • Core PPI m/m expected at 0.1%
  • Prelim UoM Consumer Sentiment expected at 89.9

UK

The Bank of England kept their bank rate and asset purchase facility unchanged at 0.5% and 375B respectively and their minutes showed that all member were unanimous in keeping the monetary policy unchanged. The BOE was relatively dovish in its inflation report, cutting the Q2 growth forecast to 0.3% from 0.5% and cutting the 2016 GDP forecast to 2% from 2.2%. Furthermore, the BOE dampened any hopes of rate increases in the near future as it placed rate hikes as far out as in 3 years and reiterated that there was room for rates to be lowered if required. Regarding the Banks view on a Brexit, they priced in a 10 to 15% drop in the value of the GBP against the green back along with further reductions in growth and inflation for an extended period should the UK vote to leave the EU.

Today sees two members of the MPC due to speak, with member Haldane and Weale taking the podium.

Asia-Pacific

Asian equities traded mostly lower as they followed a subdued Wall Street`s lead, the Nikkei 225 lost 1.1% as a strengthening JPY dampened exporters sentiment and a barrage of earning expectation misses weighed on the index. The ASX 200 lost 0.5% as commodities dragged the index lower. The Shanghai Composite bucked the trend, gaining 0.3%, as recent benefits of the Bank of China’s interventions upped the sentiment for the area.

Commodities

Crude oil gained in early trade yesterday as Iraq stated that it sees renewed talks surrounding the output freeze at the June OPEC meeting but lost some ground overnight on a strengthening green back and overbought sentiment for the commodity given the approach of the weekend.