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Slow Start To Condensed Trading Week

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Fundamental analysis of Forex market

Notes/Observations

  • Various German State CPI data improves from month-ago levels aided by higher oil prices and a base effect in energy costs
  • Markets continue to watch various coronavirus hotspots and the potential impact on an economic recovery

Asia:

  • Japan May retail sales M/M: 2.1% v 3.0%e; Y/Y: -12.3% v -11.6%e
  • China May Industrial Profits Y/Y: +6.0% v -4.3% prior [largest rise since March 2019]
  • China PBOC reiterated domestic economic growth faces challenges from the global coronavirus pandemic, notes signs of improvement amid business re-openings

Coronavirus:

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  • Total global cases 10,117,700 (+5.5% vs. Friday); total deaths: 501.3K (+2.5% vs. Friday)
  • Tokyo (Japan) reported to give new direction to virus monitoring indicators as number of new cases hits highest level since early May
  • California Gov Newsom ordering 7 counties to shut down bars after coronavirus infections increase in California

Europe:

  • ECB’s Schnabel stated that the benefits of easy monetary policy far outweigh its side effects. Without the pandemic bond buying fund (PEPP) the region would have found itself in the middle of a severe financial crisis with unforeseeable consequences
  • Portugal PM Costa said to back Span Eco Min Calvino’s campaign to head Eurogroup
  • Germany said to plan to issue its 1st Green bond in autumn – EU said to have drafted list of 15 nations that could be allowed to resume travel with the EU starting July 1st, and US is still not among them

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 -0.88% at 358.04, FTSE 0.00% at 6,163.85, DAX +0.34% 12,130.90, CAC-40 -0.13% at 4,903.37, IBEX-35 +0.22% at 7,194.00, FTSE MIB +0.60% at 19,238.50, SMI 0.00% at 10,042.14, S&P 500 Futures +0.14%]
  • Market Focal Points/Key Themes: European indices open generally lower, but moved to perform mixed as the session wore on; industrials sector leading to upside; underperforming sectors include consumer discretionary and energy; Wirecard gained substantially after confirming will continue to operate; major companies halting advertising on social media in the US; reportedly Germany to implement program to help exporters; events expected in the upcoming US session include earnings from Micron Technologies

Equities

  • Consumer discretionary: Hugo Boss [BOSS.DE] -1% (analyst action)
  • Energy: Sound Energy [SOU.UK] +69% (operation update)
  • Healthcare: Indivior [INDV.UK] -1.5% (new CEO)
  • Industrials: Avation [AVAP.UK] +14% (earnings)
  • Technology: Wirecard [WDI.DE] +169% (business update)

Speakers

  • SNB adjusted its rate on liquidity-shortage facility; effective Wed, July 1st. To be calculated as the SNB policy rate plus a surcharge of 50 basis points. However, the lower limit for the special rate is to be reduced to at least 0%, down from the current level of at least 0.5%
  • UK PM Johnson stated that the govt to back higher infrastructure spending; believed a return to austerity would be a mistake
  • Germany provided update on Q3 debt issuance; Raised planned bond sales to €146B in quarter due to coronavirus measures (**Note: 3x more than originally forecasted)
  • UK DMO updated its Bond Issuance Plan and announced plans to sell £275B in April-Aug period via 33 Gilt auctions in July-Aug period with no syndicates. It planned to retain the auction calendar including size ranges that had been in place since May
  • Norway updated its Bond Issuance Plan for 3Q; to sell NOK6-9B in bonds during quarter
  • South Africa Central Bank (SARB) annual report: To continue pursuing price and financial stability mandate. Near-term outlook to depend upon coronavirus development
  • China Foreign Ministry spokesperson Zhao Lijoan: To impose visa ban on US officials interfering with HK Security law
  • S&P affirmed China sovereign rating at A+; outlook stable

Currencies/Fixed Income

  • USD was on soft footing but well contained within recent trading ranges as participants continue to watch various coronavirus hotspots and the potential impact on an economic recovery.
  • GBP/USD was little changed at 1.2325 as EU-UK Brexit negotiations kick into a higher gear during the week.

Economic Data

  • (NL) Netherlands Jun Producer Confidence Index: -15.1 v -25.1 prior
  • (FI) Finland Jun Business Confidence: -24 v -26 prior; Consumer Confidence: -3.9 v -9.0 prior
  • (DE) Germany Jun CPI Saxony M/M: 0.6% v 0.1% prior; Y/Y: 1.0% v 0.9% prior
  • (ES) Spain Jun Preliminary CPI M/M: 0.5% v 0.2%e; Y/Y: -0.3% v -0.5%e
  • (ES) Spain Jun Preliminary CPI EU Harmonized M/M: 0.4% v 0.4%e; Y/Y: -0.3% v -0.5%e
  • (TU) Turkey Jun Economic Confidence: 73.5 v 61.7 prior
  • (HU) Hungary May Unemployment Rate: 4.1% v 5.0%e
  • (SE) Sweden May Trade Balance (SEK): 2.4B v 5.4B prior
  • (CH) Swiss Total Sight Deposits (CHF): 683.0B v 680.1B prior; Domestic Sight Deposits: 602.5B v 598.9B prior
  • (DE) Germany Jun CPI Brandenburg M/M: +0.7 v -0.1% prior; Y/Y: 1.0% v 0.9% prior
  • (DE) Germany Jun CPI Hesse M/M: +0.6% v -0.1% prior; Y/Y: 0.8% v 0.3% prior
  • (DE) Germany Jun CPI Bavaria M/M: +0.6% v -0.2% prior; Y/Y: 0.8% v 0.6% prior
  • (DE) Germany Jun CPI North Rhine Westphalia M/M: +0.6% v -0.1% prior; Y/Y: 0.9% v 0.5% prior
  • (DE) Germany Jun CPI Baden Wuerttemberg M/M: 0.5% v 0.0% prior; Y/Y: 0.8% v 0.7% prior
  • (UK) May Net Consumer Credit: -£4.6B v -£7.4B prior; Net Lending: +£1.2B v -£2.0Be
  • (UK) May Mortgage Approvals: 9.3K v 25.0Ke
  • (UK) May M4 Money Supply M/M: 2.0% v 1.5% prior; Y/Y: 11.9 v 9.5% prior; M4 Ex IOFCs 3-months annualized: 30.8 v 21.7% prior
  • (PT) Portugal Jun Consumer Confidence Index: -33.1 v -29.1 prior; Economic Climate Indicator: -4.4 v -3.2 prior
  • (HK) Hong Kong May Trade Balance (HKD): -13.7B v -20.0Be; Exports Y/Y: -7.4% v -5.5%e; Imports Y/Y: -12.3% v -8.5%e
  • (EU) Euro Zone Jun Economic Confidence: 75.7 v 80.0e; Industrial Confidence: -21.7 v -19.7e; Services Confidence: -35.6 v -25.4e; Consumer Confidence (final): -14.7 v -14.7 advance

Fixed Income Issuance

  • (DK) Denmark sold total DKK4.9B in 3-month, 6-month, 9-month and 12-month bills

Looking Ahead

  • (BE) Belgium Jun CPI M/M: No est v 0.1% prior; Y/Y: No est v 0.5% prior
  • (DE) German Chancellor Merkel meeting with France President Macron
  • (EU) UK-EU negotiations on level playing field – 05:30 (UK) BOE Gov Bailey at forum
  • 05:30 (DE) Germany to sell €4.0B in 12-month Bubills
  • 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
  • 06:00 (IL) Israel to sell 2022, 2025, 2037 and 2047 bonds
  • 06:00 (IE) Ireland May Retail Sales Volume M/M: No est v -35.4% prior; Y/Y: No est v -43.3%e
  • 06:00 (PT) Portugal May Retail Sales M/M: No est v -17.5% prior; Y/Y: No est v -21.6% prior;
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
  • 07:00 (BR) Brazil Jun FGV Inflation IGPM M/M: 1.5%e v 0.3% prior; Y/Y: 7.2%e v 6.5% prior
  • 07:25 (BR) Brazil Central Bank Weekly Economists Survey
  • 07:30 (IS) Iceland to sell 3-month Bills
  • 08:00 (DE) Germany Jun CPI M/M: +0.3%e v -0.1% prior; Y/Y: 0.6%e v 0.6% prior
  • 08:00 (DE) Germany Jun CPI EU Harmonized M/M: 0.4%e v 0.0% prior; Y/Y: 0.6%e v 0.5% prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (ES) Spain Debt Agency (Tesoro) announcement of size on upcoming issuance
  • 08:00 (IE) ECB’s Makhlouf (Ireland)
  • 08:30 (CA) Canada May Industrial Product Price M/M: _2.7%e v -2.3% prior; Raw Materials Price Index M/M: +30.0%e v -13.4% prior
  • 08:30 (UK) BOE’s Vlieghe
  • 08:50 (FR) France Debt Agency (AFT) to sell €7.0-8.2B in 3-month, 6-month and 12-month bills (3 tranches)
  • 09:45 (EU) ECB weekly QE bond buying update
  • 10:00 (US) May Pending Home Sales M/M: +18.0%e v -21.8% prior Y/Y: -22.0%e v -34.6% prior
  • 10:30 (US) Jun Dallas Fed Manufacturing Activity Index: -22.0e v -49.2 prior
  • 11:00 (US) Fed’s Daily (non-voter) – 11:30 (US) Treasury to sell 13-week and 26-week bills
  • 14:00 (BR) Brazil May Total Formal Job Creation: -907.6Ke v -860.5K prior
  • 15:00 (AR) Argentina Apr Economic Activity Index (Monthly GDP) M/M: No est v -9.8% prior; Y/Y: No est v -11.5% prior
  • 15:00 (US) Fed’s Williams
  • 16:00 (US) Weekly Crop Progress Report
  • 17:00 (KR) South Korea July Business Survey Manufacturing: No est v 49 prior; Non-Manufacturing Survey: No est v 56 prior
  • 19:00 (KR) South Korea May Industrial Production M/M: -0.3%e v -6.0% prior; Y/Y: -2.5%e v -4.5% prior
  • 19:00 (KR) South Korea May Cyclical Leading Index Change: No est v -0.5 prior
  • 19:01 (UK) Jun Final GfK Consumer Confidence: -29e v -30 prelim
  • 19:01 (UK) Jun Lloyds Business Barometer: No est v -33 prior
  • 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 97.5 prior
  • 19:30 (JP) Japan May Jobless Rate: 2.8%e v 2.6% prior; Job-To-Applicant Ratio: 1.22e v 1.32 prior
  • 19:50 (JP) Japan May Preliminary Industrial Production M/M: -5.9%e v -9.8% prior; Y/Y: -23.1%e v -15.0% y/y
  • 21:00 (NZ) New Zealand Jun Final Business Confidence: No est v -33.0 prelim, Activity Outlook: No est v -29.1 prelim
  • 21:00 (CH) China Jun Manufacturing PMI: 50.5e v 50.6 prior; Non-manufacturing PMI: 53.6e v 53.6 prior; Composite PMI: No est v 53.4 prior
  • 21:30 (AU) Australia May Private Sector Credit M/M: 0.0%e v 0.0% prior; Y/Y: 3.4%e v 3.6% prior
  • 22:00 (SG) Singapore May Bank Loans and Advances Y/Y: No est v 2.0% prelim
  • 22:00 (SG) Singapore M2 Money Supply Y/Y: No est v 9.9% prior; M1 Money Supply Y/Y: No est v 15.9% prior
  • 22:30 (AU) RBA’s Debelle speech at Webinar Event
  • 23:00 (TH) Thailand to sell combined THB70B in 3-month and 6-month bills
  • 23:30 (HK) Hong Kong to sell 3-month and 6-month bills
  • 23:35 (JP) Japan to sell 2-Year JGB Bonds