mask Central Banks Turn the Corner, Leaving the USD in their Wake

29/ 06/ 2017

Central Banks Turn the Corner, Leaving the USD in their Wake

Daily Update - 29th June 2017

Yesterday’s Focus

  • BOE Governor Carney Speech
  • BOJ Kuroda Speech
  • ECB President Draghi Speech
  • BOC Governor Poloz Speech

Yesterday’s Explained

The dollar is coming under pressure as markets reprice for the relative performance of other forex major currencies. Comments from central bankers in recent days suggest that perhaps it will not be too long before the Fed is joined by other central banks in tightening monetary policy. In recent days, there have been hawkish indications from the ECB’s Draghi, the Bank of England’s Carney and Bank of Canada’s Poloz, all of which have signaled a potential end to their easing programs could be close. Playing currencies is a game of relatives and with traders questioning the Fed’s ability to tighten in light of subdued inflation, the dollar is under pressure. Even in the face of rising Treasury yields and the 2s/10s spread pulling higher, the dollar is suffering as other major currencies have strengthened significantly. It would appear that only the yen, with the BoJ remaining committed to easy policy, remains subdued against the dollar. Equities have picked up as US banks have been given the green light in stress tests to increase dividend and share buybacks. This is rolling into Asian and European sessions.

Today’s Focus

  • Germany Gfk Consumer Confidence, Consumer Price Index
  • UK Mortgage, Consumer Credit, Consumer Confidence
  • EU Consumer Confidence, Business Climate, Economic Sentiment Indicator
  • US Initial Jobless Claims, Gross Domestic Product, Fed’s Bullard Speech
  • Japan Industrial Production

Today’s Market

Thursday is a busy day with plenty of market movers, so let’s take a closer look. Starting things off is the German GfK Consumer Confidence for July. The Index inched even higher in June as consumers remain optimistic about their own income and economic growth. The closely watched preliminary reading of German June CPI is out at noon. US will close out the week with GDP and Unemployment Claims later in the day.