Headlines:
- ECB's Knot: Outlook for rate policy after July is unclear
- ECB's Knot: Prolonged monetary tightening might still lead to stress in financial markets
- ECB's Schnabel: The impact of our policy on inflation expected to peak in 2024
- BOJ's Ueda: When we can foresee achieving price target, then will discuss exit policy
- Germany April industrial production +0.3% vs +0.6% m/m expected
- France April trade balance -€9.71 billion vs -€8.02 billion prior
- UK May Halifax house prices 0.0% vs 0.0% m/m expected
- US MBA mortgage applications w.e. 2 June -1.4% vs -3.7% prior
- Turkish lira implosion shows no signs of stopping
- OECD sees limited improvement in global growth prospects as rate hikes set to weigh
Markets:
- AUD leads, USD lags on the day
- European equities mostly little changed; S&P 500 futures flat
- US 10-year yields down 1.3 bps to 3.687%
- Gold flat at $1,961.98
- WTI crude up 1.0% to $72.45
- Bitcoin down 0.2% to $26,900
It was a mostly sideways session as markets are lacking any appetite or real conviction, with the countdown to the US CPI and Fed decision next week starting a little early.
The lack of key economic releases this week isn't helping with that, leaving traders and investors with little to work with. There were some ECB speakers during the session but they didn't offer anything new.
The only real eye catching detail is perhaps in Turkey, with the lira imploding further in a over 7% drop against the dollar to fresh record lows.
Besides that, equities and bond market sentiment are looking rather subdued and disinterested. Meanwhile, major currencies were initially lacking any real direction but we are seeing the dollar sit mildly lower on the day currently.
That said, the ranges are leaving a lot to be desired as USD/JPY continues to stick around 139.30-50 mostly and EUR/USD also gyrating in and around the 1.0700 mark. AUD/USD is perhaps the notable dollar pair at the moment with a push to 0.6700, its highest levels in three weeks. The pair is now running up against key resistance and large option expiries on the day.
