Jun 20 • Morning Roll Call • 1548 Views • Comments Off on MORNING ROLL CALL

USA equities reach fresh record highs as tech stocks rally, U.S. dollar rises, gold and oil register falls

It was a relatively quiet day for economic calendar news, with USA investors appearing to take advantage of this impasse, by pushing up equity indices to close at record highs. The SPX closed up 0.72%, NASDAQ up 1.38% and DJIA up 0.62%. The U.S. dollar moved higher on Monday versus its major peers, as a consequence of a U.S. Federal Reserve official Mr. Dudley, expressing the Fed’s confidence that rising wages will eventually boost domestic inflation, which has shown signs of receding recently.

“Inflation is a little lower than what we would like, but we think that if the labour market continues to tighten, wages will gradually pick up and with that, inflation will gradually get back to 2 percent,” Dudley informed a local business group in Plattsburg, New York on Monday. Traders wasted no time after his speech, in raising their outlook on a rate hike before the Fed’s Dec. 12th-13th FOMC policy meeting, to 45%, from the 41% recorded last Friday.

The Dollar Spot Index closed out the day up by circa 0.4%. USD/JPY rose by circa 0.5%, to 111.56. GBP/USD fell by 0.5%, to $1.2733. The euro dropped 0.5%, to $1.1146, however, positioning data revealed by the COT report (commitment of traders) released last Friday by the CME exchange, revealed that speculators’ net bullish bets on the euro, have reached their highest level in seven years. In short; long term FX position traders are confident that the euro will rise versus its major peers.

WTI (West Texas Intermediate) oil slipped by 0.6% to $44.60 a barrel on Monday, WTI has fallen over the past four weeks in series, as U.S.A drillers add oil rigs, preventing OPEC’s efforts to rebalance the current global glut, in an oversupplied market. Gold slumped by 0.7% to $1,244 an ounce; the eighth decline of the precious metal over the past nine sessions.

The UK’s chief Brexit negotiator, David Davis, officially opened talks to begin easing the UK away from the EU and from Britain’s point of view the first day was comically inept…

Despite earlier demands that trade talks would accompany the ground rules, Britain’s Brexit minister was informed that no trade deal would even be discussed until the basic rules were agreed, such as how much the UK is legally due to pay in order to leave. The estimates suggest the bill is €100b. We can expect the UK to sulk and walk away from these discussions sooner rather than later with no deal. As a consequence of the refusal by the EU, GBP/USD sold off sharply late in the afternoon and continued to fall versus several major peers, during the dying embers of the New York session.

Economic calendar events for June 20th, all times quoted are London GMT time

01:30, currency impacted AUD. RBA June Rate Meeting Minutes. The RBA will publish its minutes, concerning the interest rate hold, revealed earlier in the month.

06:00, currency impacted EUR. German Producer Prices (YoY) (May). The forecast is for an annual fall to 2.9%, from the 3.4% reading recorded in April.

07:30, currency impacted GBP. BOE’s Carney speaks at Mansion House event in London. This event was cancelled last week, due to the tragic inferno at London’s Grenfell tower. The BoE governor may discus Brexit and provide forward guidance regarding an interest rate rise, given that three members of the BoE monetary policy committee, voted to raise rates recently.

08:45, currency impacted CHF. SNB’s Jordan Speaks in Bern. The president of the Swiss central bank. will speak in Bern.

12:30, currency impacted USD. Current Account Balance (1Q). The USA’s quarterly deficit is forecast to rise to -$123.8b, from the -$112.4b figure recorded in Q4 2016.

13:00, currency impacted CNY. Conference Board China May Leading Economic Index. Globally, this reading is curious, but unlikely to move the major currency peers.

23:50, currency impacted JPY. BOJ Minutes of April 26-27 Meeting. Signs of fiscal and monetary policy forward guidance, will be looked for in the BOJ minutes.

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