Thursday 21st May: European Open Briefing

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Thursday 21st May: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei up 0.50 %, Shanghai Composite gained 1.10 %, Hang Seng fell 0.10 %, ASX rose 0.80 %
  • Commodities: Gold at $1211 (+0.15 %), Silver at $17.20 (+0.55 %), Brent Oil at $65.20 (+0.60 %), WTI Oil at $59.10 (+0.20 %)
  • Rates: US 10 year yield at 2.25, UK 10 year yield at 1.98, German 10 year yield at 0.62

News & Data:

  • China HSBC Manufacturing PMI 49.1, Expected: 49.3, Previous: 48.9
  • Japan Industry Activity Index -1.3 %, Expected: -0.4 %, Previous: 0.1 %
  • Australia MI Inflation Expectations 3.6 %, Previous: 3.4 %
  • BoJ Seen Keeping Policy Unchanged Tomorrow; Forecasts Diverge Down The Road — BBG
  • German FinMin Schäuble Doesn't Rule Out Greek Bankruptcy — Echos
  • Japan shares set fresh 15-year high, dollar holds gains after Fed minutes – RTRS
  • Oil edges up after U.S. crude stocks fall; China data weigh – RTRS
  • Five big banks face criminal charges and $5 billion bill over FX rigging – RTRS
  • Bank CEOs Blame Currency Rigging on the Work of a Few Bad Apples – BBG

FOMC Minutes:

  • Fed officials gave number of reasons why Q1 weakness transitory
  • A number of Fed officials saw reasons Q1 weakness may persist
  • Some Fed officials concerned by outlook for consumer spending
  • Fed officials saw dollar exerting drag on growth for a time
  • Most Fed officials still saw risk to outlook as nearly balanced
  • Many Fed officials saw June rate rise as unlikely
  • Some Fed officials worried about elevated volatility
  • Despite recent weakness, most Fed officials still expected inflation to improve as lower oil prices waned

Markets Update:

The Fed released the minutes for their April meeting yesterday and the reaction was rather mixed. While most Fed officials saw the Q1 weakness in the US economy as transitory, there were some dovish lines in the statement. The US Dollar weakened slightly overnight and USD/JPY fell back to 121.00 after reaching a high of 121.43 post-FOMC.

In the Asian session, China released their Manufacturing PMI data, which missed expectations. There wasn’t much of a reaction in markets though, and the Shanghai Composite is up over 1 % on the day.

Looking ahead, the UK retail sales release will be the main event in the upcoming EU session, while in the US session, the focus will be on US Initial Jobless Claims and US Existing Home Sales.

Upcoming Events:

  • 08:00 BST – French Manufacturing PMI
  • 08:00 BST – French Services PMI
  • 08:30 BST – German Manufacturing PMI
  • 08:30 BST – German Services PMI
  • 09:00 BST – Euro Zone Current Account
  • 09:00 BST – Euro Zone Services PMI
  • 09:00 BST – Euro Zone Manufacturing PMI
  • 09:30 BST – UK Retail Sales
  • 12:30 BST – ECB Meeting Minutes
  • 13:30 BST – US Initial Jobless Claims
  • 14:45 BST – US Manufacturing PMI
  • 15:00 BST – US Existing Home Sales
  • 15:00 BST – US Philadelphia Fed Manufacturing Index

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