Daily Briefing, May 29 – Market Wrap & Economic Events Outlook

Posted Wednesday, May 29, 2019 by
Arslan Butt • 2 min read

Market Wrap

  • Global stocks took another move to the downside on Tuesday as the US Treasuries pushed higher on the back of heightened trade war concerns.
  • The barometer 10-year yield sank to 2.26%, and this triggered a reversal on the curve, boosting safe-haven appeal as it’s considered to be a signal of a coming recession.
  • The US indices finished the day well in the red with the Dow Jones heading the way, closing down 0.93% accompanied by the S&P and Nasdaq, falling 0.84% and 0.39% respectively.
  • The dollar index jumped higher with the DXY now back around 98.00 as the Euro trimmed lower, but traders are anticipating a robust reaction in the currencies as we proceed through the next few sessions with risk pairs in particular focus.

Looking ahead at today’s calendar, it’s relatively calm for the remainder of the Asian session and most of the European session of the day. However shortly after the US markets get moving, we have the latest rate decision from the BOC. Here’s what to expect.

Key Economic Events Today

French Consumer Spending, CPI and GDP – 6:45 GMT
The INSEE (Institut National de la Statistique et des études économiques) is due to release data on consumer spending, inflation, and gross domestic product, particularly for the French economy.

  • French Consumer Spending m/m – It’s the primary gauge of consumer spending, which accounts for the majority of overall economic activity. Economists are expecting a surge in consumer spending from -0.1% to 0.5% this month.
  • French Prelim CPI m/m – The Prelim Inflation estimates are expected to remain steady at 0.3% and may not bring any significant moves for the single currency Euro.
  • French Prelim GDP q/q – Lastly, the gross domestic product is also expected to show a growth rate of 0.3%, which isn’t going to be surprising for Euro. However, the Euro may remain supported as at least forecasts are not negative in nature.

German Buba President Weidmann Speaks- 7:00 GMT
The Deutsche Bundesbank President Jens Weidmann is due to deliver a speech titled “Prometheus and Epimetheus in the Digital Age” at the Bundesbank Payments Symposium, in Frankfurt. This may not bring significant moves in the market today, yet is worth monitoring for any surprising remarks.

ECB Financial Stability Review – 8:00 GMT
The European Central Bank releases this report twice a year. It’s an assessment of conditions in the financial system and potential risks to financial stability. The evidence on strains and shortcomings can provide insight into the future of monetary policy. In the absence of significant events, the financial stability report can play a trick in moving the market today.

Bank of Canada Monetary Policy Decision – 14:00 GMT
The BOC has been one of the few central banks among liberal economies (apart from US Federal Reserve) that’s been able to raise interest rates despite the crises and trade war. The Bank of Canada has increased rates four times since 2017 but hasn’t changed rates since October 2018.

What are the chances of a rate hike?
The Bank of Canada will make its next overnight rate decision on May 29, with seven specialists surveyed by online financial comparison site Finder anticipating that the Bank will keep the interest rate steady at 1.75%. Therefore, no rate hike sentiments are likely to keep the Canadian dollar under pressure.

Good luck!

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