t was a light day for economic news but another big day for political developments. While the US political landscape remains volatile, there was a particular focus on Europe today. France’s election campaign kicked off with current leader in the polls Marine Le Pen outlining her plans to take France out of the Eurozone through a Frexit referendum. Meanwhile in Germany, polls suggest that Chancellor Merkel’s lead has pretty much evaporated heading toward elections this fall. Also, Greece has moved back up to the front burner with an IMF report on the country’s debt due, while in Italy one of the big banks is trying to raise capital through another rights offering to existing shareholders. Brexit also continues to simmer away with a Parliamentary debate on the Brexit bill underway.
With Europe fracturing and the US unpredictable, the complacency that had set in by year end continues to evaporate, sending capital fleeing out of risk markets like stocks and EUR and back into defensive havens like gold and JPY. The yen may remain in focus through today’s Asia Pacific trading day with the rising currency potentially weighing on Japanese stocks.
Australia may also attract attention around today’s RBA meeting. No change is expected to interest rates but the statement some trading interest. AUD has been climbing in recent weeks with USD easing back, so it will be interesting to see if Governor Lowe has anything to say on the Australian Dollar. The other topic that could come up is inflation with price pressures building in a number of countries lately. In Australia the Melbourne Institute inflation estimate rose to 2.1% from 1.8% in its latest report. Overall the street appears to be expecting a neutral stance. Dovish leanings could send AUD lower while hawkish leanings could spark another rally.
Tomorrow in North America, the focus turns back to trade. The US trade balance could attract attention from the Trump Administration with the President looking to change trade imbalances. It's a big day for data in Canada too with trade and PMI figures on the way.
There have been no major corporate announcements after the US close today.
Significant announcements released overnight include:
Germany factory orders 8.1% vs street 4.2%
Norway industrial production (1.4%) vs previous 1.3%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:30 am AEDT Australia construction PMI previous 47.0
2:30 pm AEDT Australia RBA interest rate 1.50% no change expected
7:00 am GMT Germany industrial production street 2.5%
8:30 am GMT UK Halilfax house prices street 6.0%
8:30 am EST US trade balance street ($45.0B)
8:30 am EST Canada trade balance street $0.2B
8:30 am EST Canada building permits street (3.5%)
10:00 am EST Canada Ivey PMI previous 60.8
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