UK: GERMANY-Merz To Visit 17 July To Sign Bilateral Pact

Jul-04 14:50

Politico reports that German Chancellor Friedrich Merz will visit the UK on 17 July to sign a bilateral Anglo-German treaty alongside UK PM Sir Keir Starmer. The article claims that the "wide-ranging pact promoting cooperation on defence, economic growth and tackling illegal migration" has been in the works for nearly a year, starting under Merz's predecessor, Olaf Scholz. It is also set to "feature a mutual assistance clause specifying [that] a threat to one nation would be regarded as a threat to the other."

  • The treaty is intended to be more wide-ranging than the defence and security pact signed in October 2024. Politico: "One area of discussion which will be more sensitive is the treaty's wording on cross-border movement, as Berlin pushes for a new EU-wide agreement on youth mobility while Starmer faces pressure to cut migration."
  • The pact comes as the Starmer gov't as it looks to repair relations with European allies. French President Emmanuel Macron is in the UK next week for a state visit. For the UK gov't there is less political risk in agreeing to bilateral treaties with EU member states, rather than a more wide-ranging deal with the EU as a whole. However, given the competencies of the EU vis-a-vis the member states, these will be limited to areas such as defence and security, rather than - for example - trade, where decisions are finalised in Brussels rather than national capitals. 

Historical bullets

BOC: ECONOMY STILL SOMEWHERE BETWEEN ITS TWO TARIFF SCENARIOS

Jun-04 14:49
  • BOC: ECONOMY STILL SOMEWHERE BETWEEN ITS TWO TARIFF SCENARIOS
  • BOC'S MACKLEM SAYS HIGHER CORE PRICES `HAS GOT OUR ATTENTION'

CANADA: USDCAD Reaches Fresh Cycle Lows, BOC Presser Ongoing

Jun-04 14:43
  • Weakness for the greenback following weaker-than-expected US ADP and ISM services prints continues to dictate general sentiment across the G10 FX space on Wednesday, although a moderately hawkish lean to the BOC decision is providing an additional tailwind for the Canadian dollar.
  • As noted, the communications kept the door open to a cut but not emphatically (Gov Macklem's opening statement: "We also discussed the path ahead for the policy interest rate. Here, there was more diversity of views.”
  • As such, USDCAD reaches fresh cycle lows below 1.3675 in recent trade, keeping bearish technical conditions firmly intact for the pair.
  • Sights are on 1.3643 next, the Oct 9 low/Sep high. Below here, attention will be on 1.3579, the 1.5 Fibonacci projection of the Feb 3 - 14 - Mar 4 price swing, before the September lows at 1.3420 will garner attention.

GILT AUCTION PREVIEW: On offer next week

Jun-04 14:40

The DMO has announced it will be looking to sell GBP4.25bln of the 4.50% Mar-35 Gilt (ISIN: GB00BT7J0027) at its auction next Wednesday, June 11.