Trade concerns ease slightly

Daily Analysis - 20/06/2018

Markets shift focus to key events today

After a choppy day for markets on Tuesday that was triggered by a trade spat between the United States and China, markets are taking a break from trade tensions to focus on the next risk events coming up today.

All eyes on Draghi speech

European equity markets opened higher after falling for three straight days on trade war fears. The dollar extended a rally against the safe haven yen, while oil recovered to trade above $65 a barrel. The euro and sterling are under pressure ahead of key events today. The central bank forum in Sintra, Portugal continues today where all eyes will be on several major central bank speakers, including ECB’s Mario Draghi, Fed’s Powell and BOJ Governor Kuroda.

Theresa May faces crunch time

The pound is in focus today. British Prime Minister Theresa May will take on pro-European rebels in her own party as she battles to keep control of the Brexit negotiations. A key vote in Parliament today will help determine the direction of Brexit and even May’s future. If she loses the vote, she could risk increasing the chances of being ousted. Meanwhile, another key risk event for the pound will be the Bank of England policy meeting tomorrow.

Crude oil inventories

The EIA crude oil inventories report is due later today. This data will be closely watched ahead of the OPEC meeting on Friday. The forecast is for a drawdown of 2.6 million barrels. Meanwhile, any headlines regarding comments from OPEC officials today will impact oil prices. Saudi Arabia favors a modest production increase to be agreed on with OPEC members and Russia at the meeting on Friday. However, Iran, Iraq and Venezuela are not on board with ramping up production levels.

Upcoming Events

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Currency
Event
Forecast
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12:30 GMT
EUR
ECB President Draghi speaks

12:30 GMT
USD
Fed Chair Powell speaks

12:30 GMT
JPY
BOJ Governor Kuroda speaks

14:30 GMT
USD
Crude oil inventories
-2.6m
-4.1m

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