Daily Update - 20th June 2018
On Tuesday, a major surprise from the RBA minutes released today is that it no longer predicts the next rate move as an increase. While that’s a notable change, it shouldn’t be taken too seriously for the time being. Otherwise, the minutes revealed nothing special. The main factor behind RBA’s neutral stance is sluggish wage growth. ECB President Mario Draghi delivers his speech on “Monetary policy in the euro area” at the ECB Forum on Central Banking yesterday.He opened by saying that “the euro area’s economy continues on a growth path and inflation is gradually returning towards our objective.” But recent data created “questions about the durability of the growth outlook. Draghi reiterated the decisions made last week on ending the asset purchase program in December, reinvesting the principle payments afterwards, and, keep interest rates unchanged through the summer of 2019. He added that “this enhanced forward guidance clearly signals that we will remain patient in determining the timing of the first-rate rise and will take a gradual approach to adjusting policy thereafter. From US, reports on the housing industry came out mixed on Tuesday with Building Permits underperforming and Housing Starts exceeding expectations.Building permits fell by 4.6 percent to a rate of 1.301 million units, the lowest since September 2017. Economists had forecast housing starts declining to a rate of 1.350 million units. Housing starts rose 5.0 percent to a seasonally adjusted annual rate of 1.350 million units last month, the Commerce Department said on Tuesday. That was the highest level since July 2007. Data for April was revised slightly to show starts falling to a rate of 1.286 million units instead of the previously reported pace of 1.287 million units. For the EUR, key stats scheduled for release through the day were limited to Germany’s producer price index figures for May For the Pound, economic data scheduled for release is limited to June’s CBI Industrial Trend Orders, which are forecasted to be a positive for the Pound, though direction through the day will be hinged on sentiment towards tomorrow’s BoE policy decision and more importantly the vote count that would influence the market’s outlook towards policy through the remainder of the year. Across the Pond, key stats are limited to 1st quarter current account figures and May’s existing home sales numbers, with the stats skewed to a positive Dollar, though with FED Chair Powell scheduled to speak in the early afternoon and noise from the Oval Office on trade to consider, the stats are unlikely to have a material impact. Yesterday’s Focus
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