Sample Category Title

Notes/Observations

European data continues to improve, building case for ECB policy normalization,

France Q1 GDP revised higher

Major European PMI Manufacturing data beats expectations and extent further into expansion territory (France, Germany and Euro Zone all improve)

Overnight

Asia:

Japan Jun Preliminary PMI Manufacturing registered its 9th month of expansion but the lowest pace in 6-months (52.0 v 53.1 prior);

North Korea said to have carried out another rocket engine test, likely for small stage of 3-stage ICBM type rocket engine

Europe:

PM May stated that EU citizens who currently live in the UK would not be forced to leave after Brexit; had no intention of breaking up families. Proposal was "fair and serious" offer that ~3M EU citizens living in the UK for 5 years would be offered a new UK settled status with rights to stay and access to health, education plus other benefits; proposal is dependent on EU guaranteeing Britons same rights

German Chancellor Merkel noted that the UK offer on citizens' rights was a good start, but many issues were still to be resolved including finances and relationship with Ireland

BOE's Forbes (outgoing dissenter) saws some urgency to tighten monetary policy; liftoff of UK rates shouldn't be delayed longer

SNB's Maechler reiterated view that SNB has the ability to intervene in the forex market if necessary

Americas:

Senate healthcare bill text released. GOP Sens Paul, Lee, Johnson and Cruz release joint statement that they were not ready to support healthcare bill; currently open to negotiation and obtaining more information

Congressional Budget office (CBO) planned to release scoring on Senate healthcare bill early next week

Mexico Central Bank (Banxico) raised the Overnight Rate by 25bps to 7.00% (as expected). Vote was not unanimous with one member voted to keep rates unchanged. Current rate was consistent with 3% inflation target

Economic Data

(NL) Netherlands Q1 Final GDP Q/Q: 0.4% v 0.4%e; Y/Y: 3,.2% v 3.4% prelim

(SG) Singapore May CPI M/M: 0.3% v 0.1%e; Y/Y: 1.4% v 1.3%e; CPI Core Y/Y: 1.6% v 1.7%e (highest annual pace in nearly three years)

(FR) France Q1 Final GDP Q/Q: 0.5% v 0.4%e; Y/Y: 1.1% v 1.0%e

(FR) France Jun Preliminary Manufacturing PMI: 55.0 v 54.0e (9th month of expansion), Services PMI: 55.3 v 57.0e, Composite PMI: 55.3 v 56.7e

(DE) Germany Jun Preliminary Manufacturing PMI: 59.3 v 59.0e (31st month of expansion), Services PMI: 53.7 v 55.4e, Composite PMI: 56.1 v 57.2e

(TW) Taiwan May Industrial Production Y/Y: 0.8% v 0.5%e

EU) Euro Zone Jun Preliminary Manufacturing PMI: 57.3 v 56.8e (47th month of expansion), Services PMI: 54.7 v 56.1e, Composite PMI: 55.7 v 56.6

Fixed Income Issuance:

(IN) India sold total INR150B vs. INR150B indicated in 2022, 2029, 2033 and 2051 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.1% at 388, FTSE -0.3% at 7416, DAX -0.3% at 12757, CAC-40 -0.2% at 5271, IBEX-35 -0.5% at 10656, FTSE MIB -0.3% at 20862, SMI -0.2% at 9034, S&P 500 Futures +0.1%]]

Market Focal Points/Key Themes European Indices trade modestly lower across the board with continued weaker Oil prices weighing. Activity has been fairly lackluster with little in the way of market moving news and a quiet corporate calendar. Gambling stocks in the UK have been under pressure after the CMA launched enforcement action against the firms, whilst Imagination Technologies continued to see upside momentum after yesterday announcing that its started a formal sale process. Meanwhile Zumtobel reported full year results, with a dip in Rev causing weakness in shares, whilst NN Group trade over 3% lower after Dutch Watchdog says NN Group must compensate customers based on estimate of losses due to misinformation. Looking ahead to the US morning session, notable earners include Blackberry and Finish Line.

Equities

Consumer discretionary [GVC [GVC.UK] -1.1% 888 [888.UK] -0.9%, William Hill [WMH.UK] -0.9%, Ladbrokes Coral [LCL.UK] -0.5% (CMA launches enforcement action against gambling firms), - Zumtobel [ZAG.AT] -4.3% (Earnings)]

Technology: [ Imagination Tech [IMG.UK] +10% (Follow through)]

Healthcare: [Genfit [GNFT.FR] -1.8% (Reaches a critical milestone towards the development of a non-invasive IVD test for Nash), - Gensight [SIGHT.FR] -2.8% (Placing), - Diasorin [DIA.IT] +2.9%, Tecan [TECN.CH] -1.0% (To collaborate with Tecan in new platform development)]

Speakers

ECB said to recommend amending article 22 of Statute to enable Eurosystem to fulfill mandate and become a Euro clearer regulator EU Leaders commented ahead of final day Summit in Brussels

UK PM May reiterated view that had a very constructive start to Brexit negotiations and presented a fair proposal on citizen rights

EU's Juncker noted that the UK proposal on citizen rights was a 1st step but was not sufficient

YouGov/Times poll: 35% of survey respondents would prefer Corbyn (opposition) as PM vs. 34% for May (Corbyn overtaking May for first time). 30% were unsure when asked who make the best prime minister

Brazil Central Bank (BCB) Gov Goldfajn: Inflation was under control

Currencies

FX markets were little phased by improve European economic data. France Q1 GDP was revised higher while the major European PMI Manufacturing data beat expectations and extented further into expansion territory (France, Germany and Euro Zone all improve)

Dealers noted that the USD in a holding pattern as the summer doldrums appeared to begin early. Federal Reserve has raised interest rates four times since late 2015, and three times since the US election last November. US Treasury yields have fallen around 50 bp since the March rate hike.

Fixed Income

Bund futures trade at 164.99 down 9 ticks, near the session highs as markets try to figure out when the ECB will announce its tapering schedule. Resistance lies near the 165.52 level, followed by 166.21. A break of the 163.89 support level could see lows target 162.05 followed by 160.30.

Gilt futures trade at 128.82 down 40 ticks as MPC-dated SONIAs are showing increased bets on 2017 BOE rate hikes this morning. Price is pulling back towards the lower third the June trading range. If price becomes bearish and drops below the noted 128.53 level, initial support lies at the 127.96 level, with key support at the 126.70 support level. Resistance lies at the 129.14 level, followed by the 129.80 level. Major resistance lies at the 132.65. region.

Friday's liquidity report showed Thursday's excess liquidity rose to €1.6099T a gain of €8.3B from €1.6016T prior. Use of the marginal lending facility rose to €253M from €203M prior.

Corporate issuance saw $0.5B come to market via 1 issues headlined by Adani Ports 10-year fixed note offering. This week's issuance is at $19.2B, lower than the analysts' issuance target to come in around $20B. For the week ending Jun 22nd Lipper US fund flows reported IG funds net inflows $1.55B bringing YTD inflows to $65.84B, High yield funds reported outflows of $0.1B bringing YTD outflows to $4.83B.

Looking Ahead

(ZA) South Africa to sell combined ZAR650M in 2025, 2029 and 2033 bonds

06:00 (UK) DMO to sell combined £2.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.0B respectively)

06:45 (US) Daily Libor Fixing

07:30 (IN) India Weekly Forex Reserves

07:30 (TR) Turkey Jun Real Sector Confidence (Seasonally Adj): No est v 104.8 prior; Real Sector Confidence (unadj): No est v 109.2 prior

07:30 (TR) Turkey Jun Capacity Utilization: No est v 78.8% prior

08:00 (BR) Brazil Mid-Jun IBGE Inflation IPCA-15 M/M: 0.1%e v 0.2% prior; Y/Y: 3.5%e v 3.8% prior

08:00 (ES) Spain Debt Agency (Tesoro) announces details of upcoming auctions

08:15 (UK) Baltic Dry Bulk Index

08:30 (CA) Canada May CPI M/M: 0.2%e v 0.4% prior; Y/Y: 1.5%e v 1.6% prior; Consumer Price Index: 131.0e v 130.4 prior

08:30 (CA) Canada May CPI Core- Common Y/Y: 1.4%e v 1.3% prior, CPI Core- Trim Y/Y: No est v 1.3% prior; CPI Core- Median Y/Y: No est v 1.6% prior

09:00 (BE) Belgium Jun Business Confidence: -0.8e v -1.1 prior

09:00 (MX) Mexico Apr Retail Sales M/M: +1.0%e v -1.3% prior; Y/Y: 2.4%e v 6.1% prior

09:00 (CL) Chile May PPI M/M: No est v -1.1% prior

09:45 (US) Jun Preliminary Markit Manufacturing PMI: 53.0e v 52.7 prior, Services PMI: 53.5e v 53.6 prior, Composite PMI: No est v 53.6 prior

10:00 (US) May New Home Sales: 600Ke v 569K prior

11:00 (EU) Potential sovereign ratings after EU close

(AT) Austria Sovereign Debt to Be Rated by Moody's

(FR) France Sovereign Debt to be rated by Moody's

(DE) Germany Sovereign Debt to be rated by Moody's

(GR) Greece Sovereign Debt to be rated by Moody's

(US) United States Sovereign Debt to be rated by Moody's

(BE) Belgium Sovereign Debt to be rated by Fitch

11:15 (US) Fed's Bullard (non-voter, hawk) in Cleveland

12:00 (US) Fed's Mester speaks in Cleveland

13:00 (US) Weekly Baker Hughes Rig Count data:

13:30 (DE) German Fin Min Schaeuble participates on panel regarding Europe

14:15 (US) Fed's Powell (voter, neutral) in Chicago

• US PMI and housing data in focus as quiet week draws to a close;
• US oil rig data of interest as dead cat bounce in WTI and Brent signals possible further downside;
• GBP gains as BoE commentary turns increasingly hawkish;
• EUR higher as eurozone manufacturing PMI hits multi-year high.

US equity markets are expected to open a little higher on Friday after three days of small losses, with the focus on an otherwise quiet day falling on the PMI data for June and comments from a few Federal Reserve officials.

It's been a relatively quiet week on the whole so far from an economic data perspective. The flash manufacturing, services and composite PMIs will give us something to look out for, with all three expected to notch up moderate improvements while doing little to convince people that the economy is recovering from its slow start to the year. Should the soft data continue into the third quarter, it may force the Fed into considering slowing the pace of tightening – as markets already appear to be pricing in – which they seem very reluctant to do.

We'll also get new home sales data which has been on a nice uptrend since the start of last year and comes after a decent beat on existing sales earlier in the week. Three Fed officials are lined up to appear today including Jerome Powell – a permanent voter on the FOMC – Loretta Mester and James Bullard. Mester and Bullard are both non-voters this year and the latter, as was evident by comments on Thursday, is among the more dovish officials. Still, it will be interesting to see how they interpret the recent data and whether they see any downside risks that will influence the pace of tightening.

Late on in the day we'll get the latest rig count data from Baker Hughes, which comes as oil claws back some of the substantial losses suffered earlier in the week. Brent and WTI may be higher for a second day but as it is, there's little reason to believe this is anything more than a dead cat bounce and that next week may be another painful one. Traders are clearly unconvinced by the cuts that are intended to bring inventories down to their five year average, particularly against the backdrop of rising output from the US, Libya and Nigeria. A clear break below $44.50 in Brent and $42 in WTI could trigger further downside for oil, with $40 being the next big test.

Sterling is making small gains again this morning, aided once again by hawkish comments from Kristin Forbes who supports a rate hike but will leave the Bank of England at the end of the month. While traders still appear at ease with the recent hawkish turn but with Andy Haldane voicing his concerns on inflation this week, perhaps they shouldn't be. Still, even with recent gains, the pound remains range-bound against the dollar with 1.26 providing solid support below and 1.28 resistance above.

The euro is also trading a little higher today, supported by good PMI numbers from the eurozone, Germany and France. While some of the numbers have come off their recent highs, they still remain well above 50 – the level that separates growth from contraction – and point to stronger growth for the region. It's also encouraging that the manufacturing PMI for the euro area hit a multi-year high in June, which bodes well heading into the second half of the year.

It's remarkable thattoday marks exactly one year since Britain voted to leave the European Union,yetSterling still remains at depressed levels with the currency struggling to nurse the deep Brexit wounds. Although there was some optimism in the latter half of 2016 when economic data unexpectedly displayed resilience against Brexit, the visible signs of slowing growth in the first quarter of 2017 were a massive wakeup call. Since then, the Pound has found itself pressured from all directions as the ongoing Brexit developments, political instability in Westminster and influx of depressing economic data weigh heavily on the currency.

As we move deeper into the year, the horrible combination of rising inflation and tepid growth are likely to place the Bank of England in a complicated position. The interest rate tug of war between Bank of England policymakers has already started with expectations constantly fluctuating over when, or if, rates will be hiked. Although leaving interest rates unchanged seems like a safe bet amid the uncertainty, there is a risk of inflation rising uncontrollably which may aggravate the fall in real wages while punishing savers. On the other hand, raising US interest rates could negatively impact growth, dent business confidence and hit consumers even further. It will be interesting to see how the Bank of England solves this complicated jigsaw and while the end result remains uncertain, there is some certainty that Sterling will be impacted.

Brexit negotiations and UK politics will also heavily impact Sterling this year which can already be seen in the currency's price action. The growing uncertainty at home and abroad should leave the Pound highly vulnerable to losses with bears exploiting the technical bounce to drive prices lower.

From a technical standpoint, the GBPUSD currently trades within a bearish channel on the daily charts. Previous support around 1.2775 could transform into a dynamic resistance that opens a path lower towards 1.2600.

Gold glitters once again

Gold bulls received inspiration this week in the form of plunging oil prices which weighed on global sentiment and soured risk appetite. A weakening Dollar coupled with mixed messages from policymakers on US rate hike timings supported the metal further as prices lurchedtowards $1258 during Friday's trading session. With the zero-yielding metal notoriously known for being dictated by US rate hike expectations, there is a possibility of gold venturing higher if speculations of the Federal Reserve taking action this year decline. Due to Brexit developments, political risk in Washington and oil's oversupply woes stimulating risk aversion, safe-haven assets are likely to remain supported moving forward. From a technical standpoint, Gold is currently trading within a bullish channel on the daily charts and there is a visible reluctance to break below $1240. A decisive breakout and daily close above $1260 could bring bulls back into the game.

WTI Crude limps into Friday

WTI Crude edged higher during Friday's trading session on the back of profit-taking, but sentiment remained heavily bearish amid the oversupply concerns. With Oil prices officially in a “bear market,” investors will be paying close attention to how OPEC responds and if further cuts are put in place to reduce the global glut. The bias towards the commodity remains tilted to the downside with price action displaying doubts over OPEC's ability to trim global inventories to their five-year average in 2018. I believe this may be a critical period for oil especially when considering how prolonged periods of low prices and US Shale resurgence could cause OPEC's output-cut deal to collapse. From a technical standpoint, WTI Crude is under intense selling pressure on the daily charts. A technical bounce may be on the cards before prices trade back towards $42.

Gold Medium-term bullish.

Gold's medium-term momentum is positive. Hourly support is located at 1240 (yesterday low). Stronger support is given at 1214 (09/05/2017 low). Expected to show short-term upside pressures.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

Silver Short-term bullish consolidation.

Silver's selling pressures are strong despite ongoing bullish consolidation. Closest support is given at 16.36 (21/06/2017 low). Strong support is given at 16.06 (09/05/2017 low). Key resistance is given at a distance at 19.00 (09/11/2017 high). The road seems wide open for further decline.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Crude oil Strong bearish pressures.

Crude oil is finally continuing its decline since the recent collapse from $52. Support given at a 42.20 (14/11/2017 low) has been broken. Expected to show further decline.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

EUR/JPY Sideways price action.

EUR/JPY has bounced back after breaking hourly support given at 122.56 (18/05/2017 low) has been broken. Hourly resistance can be found at 125.82 (16/05/2017 high). Major support is given at 114.90 (18/04/2017 low).

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Selling pressures increase round 0.8800.

EUR/GBP is struggling to go any higher. Hourly resistance is given at 0.8866 (12/06/2017 high). Other support can be found at 0.8652 (08/06/2017 low). Expected to show continued strength.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/CHF Heading lower.

EUR/CHF's bearish pressures are definitely on. Yet, we believe that the medium-term pattern suggests us to see continued bearish pressures towards hourly support that can be found at 1.0792 (03/05/2017 low).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

USD/CHF Bearish pressures accelerate.

USD/CHF is pushing lower. Hourly resistance can be found at given at 0.9771 (09/06/2017 high). Strong resistance is given at 1.0107 (10/04/2017 high). Expected to show continued short-term bullish pressures.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Monitoring recent lows.

USD/CAD is still in a consolidation phase after the strong decline. Hourly support lies at 1.3165 (14/06/2017 high). Expected to show continued weakness towards support given at 1.3010 (16/02/2017 low).

In the longer term, the pair lies in a bullish channel since a year. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Testing support area around 0.7500.

AUD/USD's technical structure is positive since early May. Yet, in the short-term there are bearish pressures towards support given at 0.7520 (09/06/2017 low)

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/USD Sideways price action between 1.11 and 1.12.

EUR/USD is trading mixed. The pair is still trading below strong resistance given at 1.1300 (09/11/2017 high). Hourly support can be found at 1.1076 (18/05/2017 low). Stronger support lies at 1.0842 (11/05/2017 low).

In the longer term, the momentum is clearly negative. We favour a continued bearish bias towards parity. Key resistance holds at 1.1714 (24/08/2015 high) while strong support lies at 1.0341 (03/01/2017 low).

GBP/USD Reaching an inflection point.

GBP/USD is still bouncing higher since the pair failed to hold below former hourly support given at 1.2636 (09/06/2017 low). Hourly resistance lies at 1.2818 (14/06/2017 high). Expected to show further renewed selling pressures.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Continued consolidation before testing again resistance at 112.13.

USD/JPY has failed to monitor resistance given at 112.13 (24/05/2017 high). Hourly support can be found at 108.89 (14/06/2017 high). Stronger support is located at 108.13 (17/04/2017 low).

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

The euro has posted slight gains in the Friday session. Currently, EUR/USD is trading at 1.1170. On the release front, German and Eurozone Manufacturing PMIs both pointed to expansion. In the US, today’s highlight is New Home Sales, which is expected to climb to 599 thousand.

A stronger global economy has spurred demand for exports from the euro-area, and this has boosted the manufacturing sectors in Germany and the eurozone. German Manufacturing PMI ticked lower to 59.3 in May, above the forecast of 59.1 points. Germany’s manufacturing sector continues to show strong growth, and the April reading of 59.4 was the highest since March 2011. The news was also positive in the eurozone, as Manufacturing PMI improved for a tenth straight month, climbing to 57.3 points. This beat the estimate of 56.9 points. On Thursday, the ECB’s economic bulletin projected solid growth in the euro-area in the second quarter, buoyed by low inflation rates and stronger domestic demand.

The Federal Reserve has surprised the markets with its hawkish stance, as underscored by last week’s rate statement. The statement mentioned that the Fed plans to reduce its balance sheet later in 2017, although it did not provide further specifics. The balance sheet has ballooned to $4.5 trillion, which accumulated after the 2008 financial crisis, when the Fed went on a bond-buying spree to stimulate the economy. The reduction will be gradual, but still marks an important change in direction for the central bank. On Wednesday, FOMC member Patrick Harker said that he was in favor of the reduction commencing in September. The Fed has hinted at one more rate hike in the second half of 2017, and the markets have circled December as the most likely date for a rate move. The CME Group has pegged the odds of a September hike at just 13%, compared to 18% a week ago. However, the odds for a December increase are at 49%, and this could increase if Fed policymakers continue to wax positive about the economy.

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USD/CAD is in the late stages to complete blue wave five move from the highs. After the completion of the a-b-c pullback and an ideal 1 to 1 ratio between corrective legs we have turned lower in the impulsive manner and we now expect blue wave five to find support around 1.3100 area from where a pullback higher could be expected.

USDCAD, 1H

Trendless markets as investors seek new drivers

More than a week after the FOMC lifted borrowing costs in the US, financial markets - particularly the equity market - have been treading water as investors struggle to find a new driver. Both the Euro STOXX 50 and S&P 500 are about to close the week flat. In the bond market, the picture is quite similar as US treasury yields erased last week's gains, which were made on the back of a surprisingly hawkish Fed statement. Only the pound sterling, which is subject to a lot of uncertainty due to the Brexit situation, has created some excitement. This morning, GBP/USD extended gains as it returned to 1.2735; however on the longer-term it continues to trade within its monthly downtrend channel.

After a very light week in terms of economic data, the US dollar has started Friday on the backfoot with the dollar index falling 0.30%. A bunch of soft economic indicators are due for release later today - manufacturing, services and composite PMIs - but we believe investors won't pay much attention to those as they are looking for longer term drivers.

For now, investors do not expect a Fed interest rate hike in September but leave the door wide open for December. On the political side, the President Trump impeachment story is losing momentum. Against this backdrop, the yellow metal initiated a small rally as it rose to $1256 from $1240. Should this trendless situation remain, gold should have legs to extend gains.

Canadian inflation in spotlight

Markets have completely priced in a 25bp rate hike by the Bank of Canada by the end of 2017 leaving room for economic disappointment. We believe it's too early for the BoC to be thinking about higher rates. With front-end yields at the near term high, we doubt that CAD will have much more upside. In the longer term, the weakness and sustained negative outlook for oil prices will likely drag Canadian growth and pressure inflation dynamics.

It was BoC Governor Poloz speech which included a hawkish signal shift that drove policy tightening expectations. Yet commodity weakness will force members to easy back on arguments for normalisation. While uncertainty over US economic policy and NAFTA renegotiations will linger, markets will be focused on today's Canadian inflation data for May.

While this read fails to take into account crude sharp drops, it should help steer expectations. We suspect risks are asymmetrical, with significant downside should CPI disappoint and traders fade BoC hawkishness. Annual Core CPI is expected to come in at 1.4% from 1.3%. Although market sentiment on USDCAD is bearish, we remain constructive on pair.