Daily Market Report,
Good morning and welcome to Monday morning here in London town.
A volatile start to a fresh week for cable (GBP/USD) so far, with the spot witnessing two-way businesses, as markets react to the weekends headlines on the UK politics.
GBP/USD kicked-off the week with a bearish opening, moving some 0.4% lower from closing levels of Friday after the UK PM May and Brexit Minister Davis took a tough stand on the Brexit negotiations, threatening to quit Brexit talks if it faces massive bill of a EUR 100 billion.
Also recent outcomes of the opinion polls on the UK election continue to weigh down on the pound.
Survation and YouGov poll published over the weekend showed that the Conservatives Party is losing popularity as we inch closer towards the snap elections scheduled on June 8. Survation poll revealed support for Conservatives stood at 46% of the vote versus 48% seen last Monday.
Looking ahead, politics surrounding the UK and US are likely to dominate markets this week, besides the UK GDP, inflation report hearings and FOMC minutes will also have a major impact on the UK currency in the week ahead.
Meanwhile, the US dollar saw a minor-recovery against most of its major peers after last week’s declines, lifting the USD/JPY pair back above 111.50 levels. Among other related markets, the Asian indices traded firmer amid a rally in oil prices amid reports that OPEC and other major oil producers are on track to extend the supply cuts at a meeting on Thursday.
Later today, the EUR calendar remains data-dry, except for the German Bundesbank’s monthly report and Euro group meetings. The NA session also has nothing of relevance to be reported in terms of macro data, however, Fedspeaks, RBA Assistant governor Debelle and UK PM Theresa May’s speeches remain on the radar for fresh impetus.
The greenback – tracked by the US Dollar Index – has started the week on a firm note vs. its G10 peers, extending the bounce off lows in the 97.00 neighborhood seen last Friday.
After reaching fresh multi-month lows just below 97.00 the figure on Friday, dip-buyers seem to have emerged and are now pushing the buck to the area of daily highs around 97.30.
Yields in the US money markets are also recovering from recent lows and are lending extra oxygen to the Dollar’s up move.
USD gained some ground today as the recent effervescence in the US political scenario seems to have subsided somewhat following the ‘Russia gate’, while expectations of a Fed’s move at the June meeting are back to the fore. According to CME Group’s FedWatch tool, the probability of higher rates next month is at 78.5% based on Fed Funds futures prices.
On the positioning front, the greenback lost further ground during the week ended on May 16, as speculative net longs have retreated to the lowest level since early October 2016, as per the latest CFTC report.
Event wise today in the US, speeches by FOMC’s L.Brainard (permanent voter, centist), Philly Fed P.Harker (voter, hawkish) and Minneapolis Fed N.Kashkari (voter, dovish) should keep the attention on the buck ahead of the publication of the FOMC minutes on Wednesday.
Statistics to watch out for today
No major economic releases today.
Have a great day all.