MORNING ROLL CALL
Oil slumps again, sterling recovers, dollar maintains recent highs, whilst U.S. and European markets sell off
The UK government engaged in its version of Japanese kabuki theater on Wednesday, the UK parliament officially reopened with what’s termed the Queen’s speech, a ceremony of pomp and circumstance made all the more ridiculous by the newly formed government having no majority, therefore its legitimacy and ability to pass laws is severely curtailed. The UK’s monarch reads out her government’s speech from a prepared parchment, usually wearing her crown, but mysteriously she chose to wear a hat this year, that suspiciously looked like a nod to the European flag; blue with what looked like small yellow stars on it. The Queen, trolling her government, surely not?
The pound recovered from the early week sell off, once the ceremony gave over to debate in the House of Commons, making gains versus the many of its peers; GBP/USD ending the day at circa 1.2666, up 0.3%. In terms of economic calendar news the UK’s monthly borrowing figures improved, however, analysts believe this is a timing issue relating to tax revenues and that the balance of public finances will severely deteriorate over the coming months. There was no other significant economic calendar news relating to Europe on Wednesday, the main European indices closed down; UK’s FTSE down 0.33%, DAX down 0.32%, CAC down 0.37% and STOXX 50 down 0.18%.
House sales data from the USA surprised the markets on Wednesday, coming in at 1.1% growth in May, beating the forecast of a -0.4% fall and well ahead of the -2.4% fall experienced in April. Prices have also reached record highs. The U.S. dollar was little changed versus a basket of its peer currencies on Wednesday, staying close to the one month peak recently reached as a consequence of expectations of a possible third Federal Reserve interest rate increase later this year. The DJIA closed down 0.27%, SPX down 0.10% and the tech stocks heavy NASDAQ index diverged from other USA indices, as it closed up 0.74%.
The Canadian dollar continued its weakness for the third straight day in series versus the U.S. dollar due to depressed oil prices, this recent collapse in the oil price, has undermined the Bank of Canada’s recent hawkish stance. USD/CAD ended the day at circa 1.3327, after reaching a high of 1.3348, breaching through R2.
EUR/USD climbed 0.5% to breach R1 at $1.1164, after suffering two days of declines. USD/JPY rose by circa 0.2% to 111.40 per dollar, after 0.1% gains on Tuesday. The Dollar Spot Index fell by circa 0.1%, after rising 0.7% over the previous two days.
WTI (West Texas oil) fell by circa 2% to $42.50, reaching the lowest level witnessed since August. Gold futures rose by circa 0.2% to $1,245 an ounce after falling for five days in series, but not before initially falling through S1, to a daily low of $1240 per ounce.
Economic calendar events for June 22nd, all times quoted are London GMT time
10:00, currency impacted GBP. CBI Trends Total Orders (Jun). The forecast is for a reading of 7, beating the previous reading of 9.
12:30, currency impacted USD. Initial Jobless Claims (17 Jun). The prediction is for a marginal rise of 240k, from 237k last week.
12:30, currency impacted CAD. Retail Sales (MoM) (Apr). Retail sales are predicted to rise to 0.3%, from a 0.7% rise in March.
13:00, currency impacted USD. House Price Index (MoM) (Apr). The forecast is for a rise of 0.5%, from a 0.6% rise experienced in March.
14:00, currency impacted EUR. Euro-Zone Consumer Confidence (Jun A). Confidence is forecast to improve to -3, from a -3.3 reading in May.
14:00, currency impacted USD. Leading Indicators (May). The reading is expected to fall to 0.4%, from the 0.3%reading registered in April.
