Friday 9th June : European Open Briefing

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Friday 9th June : European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei up 0.55 %, Shanghai Composite gained 0.05 %, Hang Seng lost 0.15 %, ASX 200 rose 0.20 %
  • Commodities: Gold at $1277 (-0.15 %), Silver at $17.31 (-0.60 %), WTI Oil at $45.60 (-0.10 %), Brent Oil at $47.80 (-0.15 %)
  • Rates: US 10-year yield at 2.19, UK 10-year yield at 1.04, German 10-year yield at 0.25

News & Data

  • Australia Home Loans m/m -1.9 % vs -1.0 % expected
  • China CPI m/m -0.1 % vs -0.2 % expected
  • China CPI y/y 1.5 % vs 1.5 % expected
  • China PPI y/y 5.5 % vs 5.7 % expected
  • Sterling shaken by UK election shock, fallout limited elsewhere – RTRS
  • FTSE futures, gilt yields fall as odds improve on Corbyn-led government – RTRS
  • China's easing factory gate prices hint at broader economic slowdown – RTRS

Markets Update:

The British Pound collapsed overnight, as projections showed that the ruling party of Theresa May will fall short of an overall majority. A “hung parliament” – where no party has a majority – would be the worst scenario for markets as it would make the Brexit negotiations with the EU much more difficult.

GBP/USD fell from 1.2950 to a low of 1.2693 in Asia. The pair has recovered slightly since then, but volatility will remain high until the result has arrived. From a technical perspective, 1.27 and 1.30 are the key levels to watch. Should GBP/USD have a clear break below 1.27, a decline towards 1.25 seems likely.

The Euro came under pressure as well, although the ECB did not have much of an impact. The central bank left rates & QE unchanged, hiked their economic forecasts and decreased their inflation forecast, just as expected. In the near-term, further consolidation seems likely.

While every FX trader is watching the Pound, volatility in the other currency pairs is relatively low. AUD/USD lost some momentum, but is still holding above 0.75 support. USD/JPY recovered amid a rally in equity markets. A break above 110.50 could signal a rally towards 112.

Upcoming Events:

  • 07:00 BST – German Trade Balance
  • 07:45 BST – French Industrial Production
  • 09:30 BST – UK Manufacturing Production
  • 09:30 BST – UK Industrial Production
  • 13:30 BST – Canadian Employment Change
  • 13:30 BST – Canadian Unemployment Rate

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