CHILE: BCCh Minutes Due At 1330BST / 0830ET
Jul-03 11:32
- The BCCh will publish the minutes to its June 17 MPC meeting, when it remained on hold at 5.00% in a unanimous decision. The statement struck a more dovish tone, with the Board signalling scope for a resumption of the easing cycle this quarter. (See the MNI review here.)
- The minutes come after the publication of the latest IPoM and so are unlikely to reveal any major surprises. BBVA notes that the BCCh signalled further reductions at upcoming meetings in a more front-loaded approach, even if the final cuts to neutral remain further out.
- Meanwhile, Goldman Sachs expects the minutes to show that the MPC considered the possibility of cutting the policy rate by 25bp but decided against it due to heightened uncertainty around the days of the meeting, particularly on the external front. They will be particularly attentive to any guidance from the MPC on the possibility of resuming the easing cycle in July.
- Those rate cut prospects looked to have increased this week, following soft IMACEC activity data. Looking ahead, the next key data release will be June CPI inflation next week.
- USDCLP edged down by 0.25% to 927 yesterday, keeping the pair close to recent three-month lows. A bear threat remains present, with sights on 914, the Mar 18 low.
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LOOK AHEAD: Tuesday Data Calendar: Factory Orders, JOLTS Jobs, Fed Speakers
Jun-03 11:26
- US Data/Speaker Calendar (prior, estimate)
- 03-Jun 1000 Factory Orders (3.4% rev, -3.0%), ex-Trans (-0.4% rev, 0.2%)
- 03-Jun 1000 Durable Goods Orders (-6.3%, -6.3%), ex-Trans (0.2%, 0.2%)
- 03-Jun 1000 Cap Goods Orders Nondef Ex Air (-1.3%, -1.3%), ship (-0.1%, -0.1%)
- 03-Jun 1000 JOLTS Job Openings (7.192M, 7.100M)
- 03-Jun 1000 JOLTS Job Openings Rate (4.3%, --)
- 03-Jun 1000 JOLTS Quits Level (3.332M, 3.271M), rate (2.1%, --)
- 03-Jun 1000 JOLTS Layoffs Level (1.558M, 1.614M), rate (1.0%, --)
- 03-Jun 1130 US Tsy $60B 6W bill auction
- 03-Jun 1245 Chicago Fed Goolsbee moderated Q&A
- 03-Jun 1300 Fed Gov Cook economic outlook (text, Q&A)
- 03-Jun 1530 Dallas Fed Logan, Fed listens event (text, no Q&A)
CANADA: USDCAD Focus on 1.3643 Support, BOC Rate Decision Wednesday
Jun-03 11:21
- USDCAD (+0.15%) is exhibiting a relatively tight range on Tuesday, despite the more constructive tone for the greenback. Although off recent cycle lows, USDCAD posted its lowest daily close since October on Monday, keeping the CAD’s recent resilience in focus as we approach this week’s BOC rate decision.
- We believe that better-than-expected GDP and a pickup in core inflation should tilt the balance toward a hold tomorrow. MNI’s full preview is here: https://mni.marketnews.com/3HqClXT
- Price action backs up the prevailing bear trend for USDCAD evidenced by the 20-day EMA capping the pair’s gains well last week. Sights are on 1.3643 next, the Oct 9 low/Sep high and below here, attention will be on 1.3579, a Fibonacci projection.
- The break-even on an overnight straddle sits at +/- 50 pips, suggesting markets see little risk of a significant breakout over the BOC, and place greater attention on Friday’s US employment data.
- Scotiabank points to CPI expectations remaining elevated, tariff related risks and the fact the markets aren’t pressuring the BOC as bolstering the case for a hold. Goldman Sachs think CAD could benefit from a slightly more hawkish BOC and believe better growth will be a larger positive impulse for the currency in the medium-term.
BONDS: The BTP/Bund spread is testing the September 2021 low
Jun-03 11:20
- The BTP/Bund continues to find some support at the September 2021 low, situated circa ~97.7bps.
- For now the spread sits just a small 0.4bp wider but at 97.6bps.
- Further tightening bias would still target the Psychological 90.00bps level next, printed a 90.4bps low in 2021, its lowest since mid March 2015.
- It is Worth keeping an eye on how we progress from here.
(Chart source: MNI/Bloomberg).
