Forex - US North American Summary and Highlights 10 Jun


 20:11 (GMT) 10 Jun

  [Forex Highlights]

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US North American Summary and Highlights 10 Jun (0101-LVCV-C01)

Overview

Day mainly coloured by the weekend Mexico news relief, especially on the equity side, even with Trump's latest rhetoric on China and the Fed.

News highlights

- Trump - threatens more China tariffs if Xi does not attend G20. Fed have been disruptive. Will 'do something' about French wine tariffs

- US sec.state Pompeo - expects to have good idea in 30-45 days if Mexico deal achieving expected outcomes, threatened tariffs could go into force if sufficient progress not made

- US weighs more Iran sanctions over trade with Europe

- Apr JOLTs job openings -25k to 7.45mn. Quit rate holds 2.3% high.

- Canada May Housing Starts 202.3 k (Prev: 233.4R Mkt: 210.0), Apr permits +14.7%, jump before cost increase

- BoE's Saunders (on GDP data): BoE has repeatedly said data will be volatile, weaker Q2 as Q1 inventory build unwound

- Most of Europe closed for Whit Monday holiday

Currencies:

The USD extended the recovery seen in Asia on the US/Mexico deal through the European morning, though gains were quite modest, with EUR/USD failing to sustain a dip below 1.13.

UK GDP fell 0.4% in April, much weaker than expected in April due to a sharp 3.9% m/m decline in manufacturing. This was mainly due to earlier than usual factory maintenance shutdowns related to the original Brexit deadline of March 29. While a large rebound is likely in May and June, Q2 GDP is still likely to be weak. GBP fell across the board, more than reversing some early gains.

Italian industrial production was also weaker than expected in April, falling 0.7% m/m against a 0.2% rise expected.

Bonds:

UST yields bounce overnight after the Mexico tariff reprieve though 2.15/6% break level caps. The market was already slightly covering before Trump's CNBC interview. Ranging in the recent base continued thereafter, as approaching sovereign and corporate supply also factored in and Goldman's no rate cut in 2019 call noted

2s +4.8bps @ 1.90%, 5s +5.6bps @ 1.91%, 10s +6.0bps @ 2.14%, 30s +5.0bps @ 2.62%

Agency Spreads: Freddie/Fannie 5s +0.1/-0.9 bps, 10s +0.6/+0.1 bps.

Swap Spreads: 2s -0.44bps, 5s -0.85bps, 10s -1.34bps.

Equities

Equities extend the recovery boosted by the Mexico reprieve (auto makers particularly helped) while M&A news also lifted. S&P tests 2900

To Be Released

23:50 GMT - JP: M2 Money Supply (May) % y/y (Mkt: 2.2 Prev: 2.2)

01:30 GMT - AU: NAB Business Conditions (May) (Prev: 3)

01:30 GMT - AU: NAB Business Confidence (May) (Prev: 0)

06:00 GMT - NO: CPI (May) % m/m (Mkt: 0.1 Prev: 0.4)

06:00 GMT - NO: CPI (May) % y/y (Mkt: 2.9 Prev: 2.9)

06:00 GMT - NO: CPI Core (May) % m/m (Mkt: 1 Prev: 0.5)

06:00 GMT - NO: CPI Core (May) % y/y (Mkt: 2.6 Prev: 2.6)

06:30 GMT - FR: BoF Business Sentiment (May) (Mkt: 100 Prev: 99)

08:30 GMT - EU: Sentix Investor Confidence (Jun) (Mkt: 2.5 Prev: 5.3)

08:30 GMT - UK: Average Earnings (incl. bonus) (Apr) % 3m y/y (Mkt: 3 Prev: 3.2)

08:30 GMT - UK: ILO Unemployment Rate (Apr) % (Mkt: 3.8 Prev: 3.8)

10:00 GMT - US: NFIB Small Business Optimism (May) 4cast: 103 (Mkt: 101.8 Prev: 103.5)

12:30 GMT - US: PPI (May) 4cast: 0.3% m/m (Mkt: 0.1 Prev: 0.2)

12:30 GMT - US: PPI (ex Food & Energy) (May) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.1)

Events & Auctions:

06:00 GMT - JP: Auction for Enhanced-Liquidity

09:00 GMT - UK: BoE's Saunders, Broadbent speak in Parliament

09:30 GMT - BE: 336-Day Bills Auction (EUR 1bn)

09:30 GMT - BE: 91-Day Bills Auction (EUR 0.6bn)

09:30 GMT - EU: ECB Main Refinancing Operation Result

12:50 GMT - FR: 160-Day Bills Auction (EUR 1.1bn)

12:50 GMT - FR: 286-Day Bills Auction (EUR 0.4bn)

12:50 GMT - FR: 342-Day Bills Auction (EUR 0.8bn)

12:50 GMT - FR: 83-Day Bills Auction (EUR 2.5bn)

17:00 GMT - US: 3yr Notes Auction (USD 38bn)


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