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Following on from our June 8th ECB Decision Rate Preview, here is a quick take from today's meeting:

Key Points: -

- All tspanee key interest rates were left unchanged, as expected.

- The European Central Bank (ECB) stated that “policy rates are to remain at present levels for an extended period of time”; removing the word 'lower' from...
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ECB Preview: Rate Decision due at 1245BST/0645CDT and Press Conference at 1330BST/0730CDT

  • All rates and the current pace of asset purchases are expected to be left unchanged.
  • The ECB is expected to tweak its forward guidance by categorising its growth risks as balanced. There is also a chance it may adjust guidance on rates and asset purchases.
  • Staff will update macroeconomic projections; any shift in...
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  • Asian equities saw an indecisive session ahead of key risk events with notable data releases including Japanese GDP and Chinese Trade
  • USD held onto the gains seen after Former FBI Director Comey’s prepared statement was deemed less detrimental than some had feared
  • Looking ahead, highlights include ECB rate decision, UK election and Former FBI Director Comey’s...
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    • Asian equities saw little in the way of firm direction as participants remained weary ahead of a slew of upcoming key risk events
    • AUD took focus overnight in FX markets following better than expected domestic Y/Y GDP data
    • Looking ahead, highlights include Eurozone GDP and DoE Inventories

    ASIA

    Asia traded choppy with initial downside...
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Why has a Snap Election been called?

On April 18th PM Theresa May surprised many by calling for a snap election for June 8th . May stated that her reason in doing so was to “strengthen her hand in Brexit negotiations”. While at the time that the snap election had being called, the Conservative party had a commanding 20ppt lead in the opinion polls, an opportunity that may not occur again. As...
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  • AUD pared initial weakness after the RBA kept rates unchanged as expected while striking an overall neutral tone
  • Asian equities traded mostly lower with underperformance in the ASX and the Nikkei 225 hampered by a firmer JPY
  • Looking ahead, highlights include US APIs and the NZ GDT Index

ASIA

Asia traded mostly lower following a subdued Wall St. close where...
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  • Middle east tensions see crude prices jump over 1% as several nations cut ties with Qatar.
  • Subdued trade in Asia following Saturday’s terrorist attack in London.
  • Looking ahead, highlights include UK Services PMI, US ISM Non-Manufacturing PMI and Factory Orders.

ASIA

Asia dismissed the positive Wall St. close on Friday, to trade with a cautious tone after...
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Key Events: -

Monday: UK Services PMI (May), China Caixin Services PMI (May)

Tuesday: RBA MonPol Decision

Wednesday: Australian GDP (Q1)

Thursday: ECB MonPol Decision, UK General Election, Japan GDP (Q1, F) Chinese Trade Balance (May)

Friday: Canadian Labour Market Report (May), China Inflation Data (May)

North America: -

Ex-FBI...
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  • Asian equities benefited from the increased risk-appetite after all tspanee major US indices posted record highs following strong data
  • FX price action centered around JPY, with USD/JPY and JPY-crosses lifted as the heightened risk appetite spurred outflows from the safe-haven currency
  • Looking ahead, highlights include US jobs report, Fed’s Harker and...
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EXPECTATIONS:

- The consensus looks for 185k nonfarm payrolls to be added to the US economy in May, compared to 211k added in April. That would be in line with the 185k/month pace seen in 2017 thus far.

- The unemployment rate is forecast to hold steady at 4.40%, beneath the FOMC’s NAIRU projection between 4.70% and 5.00% (made in its March forecasts). It would also be firmer than the Fed’s end-2017 forecast for unemployment of 4.50%.

EARNINGS DATA:

-...
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  • Asian equities saw mixed performance with the Nikkei 225 supported by domestic data while soft Caixin PMI weighed on the Shanghai Comp.
  • AUD underperformed due to soft Chinese data despite strong Australian numbers. Polls remain in focus for GBP
  • Looking ahead, highlights include Eurozone and UK Mfg. PMI, ADP, ISM Mfg. PMI, DoEs and a slew of central bank...
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  • The latest YouGov has projected the UK Conservative party to fall 16 seats short of an overall majority with 310 seats
  • Asian equities traded relatively mixed as China returned to market and was greeted by encouraging PMI data
  • Looking ahead, highlights include Eurozone CPI, Canadian GDP, Chicago PMI, ECB’s Coeure, Lautenschlager, Fed’s...
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  • EUR saw pressure overnight amid reports Greece could opt out of their next payment if creditors fail to agree on debt relief
  • Asian equities were relatively subdued overnight due to holiday-thinned trading conditions
  • Looking ahead, highlights include German regional & national CPIs, US Personal Spending, PCE data

ASIA

Asia equity markets traded subdued...
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Asian equities saw an indecisive session amid holiday-thinned conditions while North Korea conducted another missile test

FX markets were also relatively rangebound with the USD-index holding onto Friday’s gains

Looking ahead, highlights include ECB’s Draghi. UK and US markets closed.

**Desk will shut at 1630BST on Monday 29th and reopen at 2200BST for Asia-Pac Coverage on May 29th. (See website for full...
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The early part of the week will see lower liquidity with the US and UK markets closed on Monday, and China away on both Monday and Tuesday.

US: -

While the market is almost certain that the FOMC will hike rates by 25bps at its mid-June meeting, Fed Funds Futures are still only implying a rate of around 1.25% in January 2018, indicating doubts around the Fed’s March guidance that it is on course to lift rates to 1.25-1.50% in 2017.

In particular, per the Fed’s May...
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  • Asian equities traded broadly softer with underperformance in the ASX amid OPEC-inspired softness in energy names
  • GBP/USD trades softer as the Labour Party continues to gain ground on the Conservatives ahead of next month’s election
  • Looking ahead, highlights include US Durable Goods, University of Michigan and ECB’s Coeure

ASIA

Asia equity markets...
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  • FOMC Minutes saw USD and treasury yields back up after the FOMC thought it was prudent to wait for further evidence that recent weak data was transitory before hiking again
  • The subsequent upside in US equities filtered tspanough to Asia-Pac trade while WTI and Brent crude saw mild gains ahead of OPEC
  • Looking ahead, highlights include UK GDP, OPEC Meeting, Fed’s Brainard and ECB’s...
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Key Points: -

- The Federal Open Market Committee (FOMC) thought it was prudent to wait for further evidence that recent weak data was transitory before hiking again.

- Officials said they expected weakness would pass and that it would “soon be appropriate” to raise rates if those expectations were met.

- In general, Fed officials said their assessment of the economy had changed little since the March policy meeting, with the labour market continuing to improve and risks...
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  • Asian bourses traded mixed with downside in Chinese indices after Moody’s downgraded China’s Sovereign rating
  • UK PM May said UK terror tspaneat level has been raised to critical from severe, which suggests a further attack could be imminent
  • Looking ahead, highlights include US Building Permits, Existing Home Sales, DoE Inventories, FOMC Minutes, BoC Rate Decision, ECB’s Praet and Draghi
  • ...
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  • Asian equities traded with a mildly cautious tone amid reports of a terrorist incident in Manchester with macro newsflow otherwise light
  • In FX, reports of the Manchester explosion triggered safe-haven flows into JPY with USD/JPY briefly falling below 111.00, while GBP/JPY was the notable underperformer
  • Looking ahead, highlights include Eurozone PMIs, German IFO and a slew of central bank...
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  • Asian equities traded mostly higher despite ongoing geopolitical concerns with outperformance in the ASX amid upside in energy and material names
  • GBP/USD slipped back below 1.3000 as PM May’s lead in the latest YouGov poll narrowed
  • Looking ahead, highlights include Fed’s Kashkari and Harker

ASIA

Asia equity markets sspanugged off the geopolitical concerns...
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  • Asian equities traded with little in the way of firm direction amid light newsflow after US stocks posted a modest rebound from Wednesday’s losses
  • GBP staged another ‘flash crash’ falling around 100 pips in 12 seconds during US hours amid no new fundamental news
  • Looking ahead, highlights include Canadian retail sales, ECB’s Praet, Coeure, Constancio and Fed’s...
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  • Asian equities took the lead from their US counterparts whereby sentiment was hampered by the ongoing political tensions in Washington
  • Subsequently, the USD-index continued to drift lower while chances of a June Fed hike begin to recede
  • Looking ahead, highlights include UK retail sales, Philadelphia manufacturing, Fed’s Bullard, Mester, ECB’s Mersch, Draghi and...
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  • Asian equities traded with caution after US equity futures saw pressure following the latest developments in the FBI saga
  • JPY strengthened as the cautious tone triggered flows into safe-haven assets which saw USD/JPY break firmly below 113.00
  • Looking ahead, highlights include the UK labour report, Eurozone CPI and the DoE Inventory report

ASIA

Asian...
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  • Asian equities failed to benefit from the energy-inspired gains seen on Wall Street with the Nikkei 225 stopping just shy of 20,000
  • USD/JPY and JPY-crosses traded choppy with the early upside reversed, as sentiment soured and spurred flows into safe-haven JPY
  • Looking ahead, highlights include UK inflation, German ZEW, US Building Permits, Housing Starts, ECB’s Nowotny and...
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