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Brexit debate, Greece debt talks, CAD trading and hawkish FOMC in focus

Brexit debate, Greece debt talks, CAD trading and hawkish FOMC in focus

Asia Pacific indices were choppy overnight with the Nikkei falling 0.9% and the Hang Seng flat but trading has turned upward in Europe this morning. France’s CAC up 1.3% and Italy’s FTSE MIB up 1.4% are leading the charge while the Dax is up 0.9% and the FTSE is up 0.6%. US index futures are trading up 0.3% so far today. Crude oil continues to hover just below $50.00 with WTI down 0.4% this morning. In currency trading today, GBP is in the spotlight again, surging against other majors as the Remain side puts on another full court press ahead of next month’s vote. At inflation report testimony today, Bank of England Governor Carney and several MPC members (who are supposed to be neutral supposedly have all come to the same conclusion independently LOL) have been hammering away on the Remain party line threatening the risk of a UK slowdown/recession on a Brexit decision (which may happen on a Remain decision anyway with Europe struggling) and a lower GBP ( which is not necessarily a bad thing – look at how many nearby countries have had to go to negative rates to keep their currencies down relative to EUR like Switzerland and Sweden). They also keep suggesting the UK economy has slowed despite blowout UK retail sales last week and steady employment. Other poll results have been out this morning favouring the Remain camp including an ORB poll putting likely voters favouring Remain 55%-42%, William Hill betting results apparently show an 85% chance of a Remain victory although the betting is split with In capturing 79.2 % of the money being wagered but Out capturing 64.4% of the number of actual bets placed. Even with all of this, and PM Cameron apparently getting ready to go to the G-7 to drum up support for his side, GBP has not broken above last week’s high. This suggests that traders are still expecting a close vote and that we could see significant swings in the coming weeks as the vote approaches. Meanwhile, USD is up against pretty much everything else. Overnight Philadelphia Fed President Harker continued the trend of Fed members indicating the potential for a June rate hike based on current data trends and joining the calls for 2-3 rate hikes this year. He also became the third Fed speaker so far this week to downplay the influence of the Brexit vote on the Fed’s June interest rate decision (after my calling them out on it last Friday got picked up in the US media… see above) CAD is mixed today trading down slightly against USD and up slightly against EUR. We could see some positioning in the loonie today as Canadians return to trading from the Victoria Day weekend (Queen Victoria was born 197 years ago today), and prepare for tomorrow’s Bank of Canada meeting plus the start of earnings week for Canadian banks. It’s a light day for economic news but there’s the potential for more news from Europe today. Having approved another round of reforms on the weekend, Greece is expected to receive about €11 billion in bailout money, about double what had been discussed which should keep them going well through the summer easing the risk of a budget crisis hitting at the same time as the Brexit referendum and Spanish election votes. Also, Greek debt relief is scheduled to be discussed at an EU meeting could also influence EUR trading depending on whether there is a serious proposal or not. Corporate News Best Buy $0.44 way above street $0.35, guides next Q to $0.38-$0.43 below street $0.50 Economic News Significant announcements released overnight include: Germany GDP 1.2% as expected Germany exports/quarter 1.0% vs street 0.5% Germany ZEW current 53.1 vs street 49.0 Germany ZEW expectations 6.4 vs previous 11.2 Sweden unemployment rate 7.3% vs street 7.6% US flash manufacturing PMI (Monday) 50.5 vs street 51.0 and previous 50.8 Announcements due later today include: 10:00 am EDT US new home sales street 523K 10:00 am EDT US Richmond Fed street 8 vs previous 14 10:00 am EDT Canada Bloomberg Nanos conf previous 57.3

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