• Italy’s 5SM and League completed an accord on a coalition government with Conte now given the mandate to form a 5 Star/League coalition government
• Asian stocks traded cautiously after trade war concerns resurfaced following the US announcement to impose steel and aluminium tariffs on EU, Canada and Mexico
• Looking ahead, highlights include UK and Eurozone mfg PMIs, US NFP, ISM mfg, Baker Hughes and Fed’s Kashkari

TRADE

US metal tariff...

• Asian equities higher after following suit from the rebound seen in their global counterparts as Italian fears subside (for now) and encouraging Chinese data
• Italy's Five Star Movement have called for Savona to withdraw candidacy for Economy Minister to allow a government to be formed
• Looking ahead, highlights include Eurozone CPI, US personal consumption and PCE price index, Chicago PMI, Canadian GDP and DoEs

ASIA

Asian markets traded positive across...

• Asian equities trade lower across the board as Italian political woes and trade concerns grip sentiment overnight
• Cottarelli and Mattarella failed to reach an agreement on forming a government but will continue talks. ANSA report that failure to reach a deal could see elections on July 29th
• Looking ahead, highlights include regional and national German CPIs, US ADP, GDP, Advance Good Trade Balance, BoC Rate Decision, APIs

ASIA

Asian stocks traded lower...

• Asia traded mostly subdued as region lacked impetus following the market closures in US and UK. Political uncertainty in Italy and Spain added to the cautious tone
• In FX markets, the risk averse tone spurred flows into the safe-havens with JPY the main beneficiary which pushed USD/JPY briefly below the 109.00 handle
• Looking ahead, highlights include ECB’s Mersch and Lautenschlaeger

RECAP OF STORIES FROM OVER THE WEEKEND AND MONDAY FOR UK TRADERS AWAY FROM...

• Asian equity markets traded mostly higher on warming geopolitical ties with prospects of the US-North Korea summit back in play
• Italy PM-designate Conte reportedly gave up on efforts of forming a government after Italian President Mattarella rejected Eurosceptic Paolo Savona for the Economy Minister position
• Today’s calendar sees a lack of tier 1 highlights. UK and US markets are closed

• Asia cautious after US President Trump’s cancellation of the NK summit, albeit Trump has left the door open for the summit to take place in the future
• FX markets quiet with the USD recovering some of the lost ground from the FOMC minutes; GBP/USD back below 1.3400 and EUR/USD eyeing 1.1700
• Looking ahead, highlights include German IFO, UK GDP, US Durables, Uni. Of Michigan and a slew of speakers

• FOMC Minutes stated that most felt it would soon be appropriate to raise rates again if outlook remained intact. Minutes contained little that changes the current ‘gradual hikes’ script
• Asian equity markets traded subdued after US President Trump ordered the Commerce Department to consider a probe on auto imports
• Looking ahead, highlights include German GDP, UK retail sales, ECB minutes and a slew of central bank speakers

• Sentiment soured in Asia after Trump cast doubts over NK summit and expressed dissatisfaction regarding trade talks with China
• In FX, JPY was a beneficiary of safe-haven flows. USD flat. TRY experienced a ‘flash crash’ which saw the currency drop over 2.5% against the greenback
• Looking ahead, highlights include EZ Mfg and Services PMIs, UK CPI, US New Home Sales, DOEs, FOMC minute and a slew of speakers

• Asian stocks traded mostly subdued amid holiday closures and a lack of fresh catalysts. DXY was sideways around 93.50 following its recent pullback from YTD highs
• Italy’s President Mattarella reportedly expressed concerns with the 5SM/League fiscal plan and is said to need time to mull the PM choice
• Looking ahead, highlights include BoE QIR testimony, ECB’s Liikanen, UK/EU trade talks and US 2yr Note Auction

• Asian equity markets traded mostly positive with sentiment underpinned following the conclusion of the 2nd round of US-China trade talks
• China agreed to purchase more goods to avoid a trade war. Mnuchin announced that tariffs on China would be placed on hold as discussions progress
• Looking ahead, highlights include ECB’s Nowotny, Fed’s Bostic, Harker and Kashkari
• Due to Whit Monday, markets in Austria, Denmark, Germany, Hungary, Iceland, Norway, and Switzerland are...

• Asian stocks traded mostly positive but with gains contained as focus remained on US-China trade talks and the current geopolitical climate
• The Chinese trade delegation was said to offer a package to reduce the US trade deficit by USD 200bln annually
• Looking ahead, highlights include Canadian CPI, retail sales, Fed’s Mester, Kaplan and Brainard

• FED: Fed chair announcement to overshadow FOMC meeting
• ECB: Draghi pulls-off magic act
• BOE: MPC to hike for the first time in a decade
• BOJ: Policy meeting likely to be a snooze fest
• BOC: Cautious BOC enters data-dependent mode
• RBA: Cyclical upswing still missing
• RBNZ: Labour market data to do little to sway RBNZ
• Norges Bank: Move on, nothing...

FEDERAL RESERVE (FED)

• Attention this week will be on the Q&A part of Fed chair Janet Yellen’s semi-annual testimony to Congress (House Financial Services Committee on 12 July and Senate Banking Committee the next day). The Fed’s Monetary Policy Report, released Friday, provided little new information, reiterating gradual hikes, and gradual reduction of the balance sheet when it begins later this year. Indeed, the report largely echoed recent comments from Fed policymakers, as well as...

Click here for the RANsquawk Week Ahead Eco Preview, 26 to 30 June 2017

FEDERAL RESERVE

• The abundance of Fedspeak last week did little to persuade the market to shift towards the FOMC’s hiking trajectory – which has pencilled in seven additional 25bps hikes tspanough the end of 2019; Fed Funds Futures, on the other hand, see just two more hikes over that horizon.

• An acceptance of the need to be patient was generally evident in the tone of the 2017...

RANsquawk Weekly G10 Central Bank Monitor can be accessed here

NORTH AMERICA

TUE 20 JUN 2017 - 1330BST: US CURRENT ACCOUNT BALANCE (Q1)

Forecast: The deficit is seen narrowing to USD 124.9bln vs a deficit of 112.4bln prior.

WED 21 JUN 2017 - 1500BST: US EXISTING HOME SALES (MAY)

Forecast: 5.55mln vs prior 5.57mln. Both new and existing home sales slipped in April,...

RANsquawk's Eco Week Ahead can be accessed here

FEDERAL RESERVE

• As expected, the FOMC hiked rates by 25bps to 1.00-1.25% – the second hike of 2017, and the fourth in the current tightening cycle. Minneapolis Fed President Neel Kashkari was the lone dissenter, once again.

• The revisions to its economic projections were mostly in-line with the market view: near-term growth was raised, but the Fed is more pessimistic than analysts in...

FEDERAL RESERVE

• A 25bps hike to the Federal Funds Rate target on 14 June 2017 is pretty much a done deal, with money markets pricing in a 99.6% chance that rates will be lifted for the second time this year to 1.00-1.25%. The real question is whether the Fed will maintain its “gradual” hike trajectory, which sees a total of tspanee rate rises per annum in 2017, 2018 and 2019.
• The FOMC will also update its economic projections, which aren’t likely to see any dramatic changes in...