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Global market watch - 17th June 2019

The Dollar continues trading on relatively firm ground after rallying against most of its rivals on Friday morning, but ranges are fairly tight ahead of the Federal Reserve Bank monetary policy meeting on Wednesday afternoon with building expectations of a rate cut not this week but at their meeting at the end of next month.  Market participants will be closely watching the FOMC Statement and post-meeting press conference for clues into future policy moves.  Traders have been purchasing the Greenback on a flight to quality.  The Buck matched its one-week best versus the Euro on Friday morning, traded within a hair of its one-week peak with the Canadian Dollar on Friday also, touched its fresh 19-day best with the Pound this morning, its one-week high versus the Yen overnight, hit a fresh two-week high in its pairing with the Swiss Franc today, is trading close to the 3 January flash crash high it  touched against the Aussie Dollar early Friday afternoon, in striking distance of its three-week high versus the Kiwi Friday afternoon, along with its one-week high versus the Yuan in striking distance of the 6.5-month peak on USDCNY from last Monday trading.  In addition to the key FOMC policy meeting on Wednesday afternoon, the TIC Long-Term Purchases numbers is set for release late today, domestic Housing Starts and Building Permits are on tap for early tomorrow morning, US Current Account, the Philly Fed Manufacturing Index, along with CB Leading Index MoM on Thursday morning, followed by US Flash Manufacturing and Services PMI on Friday morning.

The Loonie traded within a few pips of the one-week low it touched with the Greenback on Friday, touched its 5-day low versus the Euro today, while it ticked a bit higher versus the Japanese Yen today.  WTI Crude Oil was largely sideways from its level on Friday but has dropped considerably since the end of May also. Canadian Foreign Securities Purchases data was not helpful at -12.80B – its worst since the February -18.96B  low - compared to +2.33B forecast consensus and -1.56B for the reading last month.  Meanwhile, the commodity group was under general pressure due to uncertainty in financial markets stemming from the US-China trade war, ongoing Brexit concerns, along with apprehension of a potential global economic slowdown on the horizon perhaps hastened by aggressive US trade policy.  The domestic Manufacturing Sales MoM release is tomorrow, key CPI MoM is on tap for Wednesday morning, the ADP Non-Farm Employment Change release is on Thursday along with an OPEC-JMMC Meeting, with the always important Retail Sales MoM number on Friday morning.

The Euro matched its one-week low versus the Buck it hit on Friday, ticked up to its five-day high with the Loonie as the commodity group was under pressure, along with a one-week best with Sterling as the Pound was sold on heightened Brexit uncertainty while the Conservative Tory Party continues its search for its new leader after former Prime Minister Theresa May just resigned on 7 June.  That said, concerns about Eurozone growth and inflation continue to be an issue with ECB members stressed that more stimulus may be required to get both growth and inflation where they need to be. Further, there are reports that Italy is seriously considering issuing mini bills of Treasury (mini-BOTs). In plain terms, they would be used by the government to pay Italian businesses it owed money to, and therefore would reduce the governments huge debt. European Central bank (ECB) President Mario Draghi has a speech on tap early this afternoon at the ECB Forum On Central banking in Simtra today. The key German and EU ZEW Economic Sentiment data is scheduled for tomorrow along with Final CPI YoY data and the Eurozone Trade Balance number, the EU Current Account and German PPI MoM numbers on Wednesday are followed by ECB president Draghi speaking again, with both the ECB Economic Bulletin and Eurozone Consumer Confidence on Thursday morning, followed by Eurozone Flash Services and Manufacturing PMI on Friday.

The Pound is trading broadly lower on increased uncertainty as Brexit is on hold while the Conservative Tory Party is in the process of electing a new leader amid the resignation of former Prime Minister Theresa May on & June as the Tory leader.  The favorite candidate is the outspoken Brexiteer Boris Johnson at this time.  Sterling is trading at its 19-day low versus the generally firm Buck this morning, largely sideways with the generally soft CAD today, along with a one-week low versus the Euro today as well.  There is a BBC debate on Tuesday between candidates to find the next Prime Minister with key UK CPI YoY, RPI YoY, HPI YoY on Wednesday morning, followed by the key UK Retail Sales MoM and always important Bank of England (BoE) monetary policy meeting on Thursday morning, followed by the BoE Quarterly Bulletin on Friday morning also.

The Dollar is trading near its 3 January flash crash peak that  it hit versus the Aussie on Friday morning, its three-week peak versus the Kiwi on Friday also, hit a fresh one-week high versus the Japanese Yen today, whilst it managed a two-week high against the Swiss Franc given that USD strength bridged the gap between the risk-weighted commodity group and safe-havens alike this morning. The key RBA monetary policy meeting minutes are due this evening along with Australian HPI QoQ with the New Zealand Current Account, Japanese Trade Balance, along with the Aussie MI Leading Index MoM tomorrow.  On Wednesday morning the SNB Quarterly Bulletin is on tap with New Zealand GDP QoQ in the evening followed by RBA Governor Philip Lowe speaking and the key Bank of Japan (BoJ) monetary policy meeting announcement overnight.   The Swiss Trade Balance follows on Thursday morning along with the OPEC-JMMC Meetings followed by Japanese National Core CPI YoY early evening.

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