EQUITIES: Looking for Concrete Cues

SX7E (20th June) 155/150ps, bought for 0.25 and 0.45 in 15k.

The Q&A with Bank of Finland Govenor Rehn has started:

Q: I would like to talk about some of the forces you’re going to learn about in the next few weeks. I’m curious which way the arguments go considering inflation is stabilizing around target and growth weakening. We're going to find out about whether tariffs actually put in place and size, but fiscal on the other side and potentially a long while away. What might you learn between now and the April meeting to do anything other than cut again?

Rehn: There are two main factors that will be focusing on: i) Ceasefire/peace agreement between the US, Russia, Ukraine and Europe [and defence spending], and ii) protectionist measures taken by Europe. Trying to make sense of the timeline of the two. 

• As regards trade policy, the effect is fairly immediate. We may assume a quite strong effect into next year, adversely on growth, as seen in 2018/19. The impact on inflation cannot be ex ante defined.
• Defence spending would have a rapid impact on growth under an optimistic view, although there are always delays in execution which suggests it would be more over the medium term. Over the short-term expect some growth dampening effects before more positive over the medium term.

• EUR/USD made light work of yesterday's highs in early trade, rallying through 1.0930 with little difficulty and tripping the bull trigger in the process. Price action this morning was intially driven by USD weakness, but the looming debate in the 'old' Bundestag over the debt brake reform is due, and markets are building a successful passage of the legislation into the price.
• Reports in German press suggest there is sufficient wiggle room among lawmakers to secure a passage of the bill even in the case of a series of a no votes among both core lawmakers and the Greens - helping EUR outperform most others into the US crossover.
• The Trump-Putin call is set for 1300GMT/0800ET, at which the leaders are expected to discuss, in detail, the specifics of a Ukraine ceasefire, including settlement terms. Unexpected progress today could be seen as risk positive, posing further upside risk to EUR/JPY, which has helped pressure JPY to the bottom of the G10 table so far Tuesday.
• US housing starts and Canadian inflation data are the calendar highlights ahead of the industrial production release. The Fed remain inside the pre-decision media blackout period.