Daily Analysis - 13/06/2018
After a lukewarm market reaction to the Trump-Kim summit that happened in Singapore yesterday, the markets turn their focus back to economic data and the FOMC later today as well as the vote on Brexit legislation.
US CPI released on Tuesday failed to impress markets and the dollar barely moved. The May report showed headline inflation rose to 0.2% m/m as expected. The results however reinforce the view that the Fed will continue to hike rates. The question is how many rate hikes this year? Today, the Fed is largely expected to show a 25bps increase. We saw a rally in USDJPY early today, with a break above 110 yen.
The focus is back on Brexit. On Tuesday PM Theresa May avoided a rebellion within her party and made concessions to avoid defeat. There was a vote that would give greater power to Parliament over upcoming negotiations on Brexit. Today, the customs union vote takes place. Meanwhile, after UK jobs numbers and wage growth surprised to the upside yesterday, CPI data will be published today.
Oil rose yesterday on the back of apparent disagreement between OPEC counties around the potential claw-back of production curbs. Also, the OPEC Monthly Oil Market Report (for May’s data) was released yesterday in which the cartel emphasized the great uncertainty they see around the strength of global demand for OPEC oil. Focus today turns to the IEA monthly report and then the crude oil inventory report from the EIA.
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