Investment Bank Outlook 01-07-2021
Citi
July starts with a bang, with plenty of catalysts to take us into the end of the week. USD has emerged triumphant after month/quarter end, though we suspect much of this move is positioning/flow driven. Our conviction is further strengthened if key levels hold in the likes of EURUSD. Given the importance of NFP, CitiFX Strategy think there will be outsized currency volatility around the June print, especially in the event of a major surprise. The setup going into the number suggests two-way risks for the USD.
For today, ISM manufacturing will be the highlight in terms of data. EUR data sensitivity remains limited, though we saw slightly disappointing data for AUD trade and JPY BoJ Tankan survey. The Riksbank will not change rates but the market will be looking for potential changes to rate path with a projected hike. Otherwise KRW underperformance overnight was a function of USD short covering ahead of top tier USD events.
RBC Capital Markets
USD has consolidated yesterday’s gains in quiet markets overnight, with all of the majors close to the NY closing levels. On the crosses, JPY is outperforming and commodity currencies continuing to underperform, though ranges have been very tight, as is typical in the days ahead of the US payrolls release. China’s Caixin PMI was close to expectations (51.3), mirroring the official index. Our commodity strategists think today’s OPEC+ meeting will answer the call to put more barrels on the market, potentially increasing supply by between 500 kb/d and 1 mb/d starting in August. Day ahead: The Riksbank rate announcement is the main G10 event today (see SEK). In the US, the ISM manufacturing headline index is expected to be little changed at a still very robust level. There are a number of central bank speakers (see table), including BoE Governor Bailey at the annual Mansion House speech (GBP). Canada is closed for Canada Day today
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.