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25th June Market Updates

The US Dollar continued to come under pressure in FX space yesterday following losses sustained last week. The Dollar traded to a multi-month low against the Yen and the Euro as markets and investors continue to price in the prospect of a Federal Reserve rate cut potentially as soon as next month.
By the close of play the Euro was up +0.20% against the Dollar trading at 1.1391, whilst the Aussie Dollar made gains of +0.57%, trading at 0.6963 vs the US Dollar.
Such is the weakness of Sterling at present, the pound actually declined by -0.11% against the Dollar on the day, closing at 1.2725.
Germany, Europe’s largest economy, could be heading towards contraction in the second quarter of 2019 according to the latest IFO Business climate print. The reading of 97.4 meant that German business morale fell for a third straight month in June, with the IFO President stating ‘The German economy is heading for the doldrums’.
Minutes from a European Commission meeting regarding Italy revealed that the EU could be prepared to give Rome as much as 6 months to address the debt issues that have caused a serious headache for the European Union. Unless the Italian Government makes concessions this week on their spending plans for 2019 and 2020 the EU executive is expected to launch disciplinary proceedings in the coming weeks with regards to Italy’s rising debt.

Overnight

Putting a fairly disastrous weekend behind him, and in a bid to turn attention back to the race to be the next PM, Boris Johnson reemphasized that he was absolutely serious about a no-deal Brexit, and whilst it wouldn’t be his preferred option his ‘pledge is to come out of the EU at Halloween on 31st October’. Mr Johnson may also have rattled a few cages in Brussels by suggesting the £39 Billion Divorce settlement previously agreed wasn’t set in stone and that there could be ‘creative ambiguity about when and how that gets paid over’.
Speaking yesterday evening US Fed Member Kaplan said it was ‘too early’ to decide if interest rates needed to be cut, calling for his colleagues to be patient and to see how economic events unfold before making any decision.
New Zealand Trade Balance 264M (200M Exp)
Japan SPPI y/y 0.8% (1.1% Exp)
BOJ Core CPI y/y 0.7% (0.6% Exp)

Today

Could be a quiet morning with no data set for release.
This afternoon US Consumer Confidence headlines at 3pm, whilst markets will also be closely listening to what Fed Chair Powell has to say when speaking at 6pm.

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