The Week Ahead – Hung Parliament, FTSE strength, Sterling weakness

The Week Ahead – Hung Parliament, FTSE strength, Sterling weakness

The Week Ahead – Hung Parliament, FTSE strength, Sterling weakness

 

Previous week: 19 June 2017 – 23 June 2017

BOE’s Mark Carney and Andy Haldane

Mark Carney says “now is not the time” to increase rates. Andy Haldane says “Provided the data are still on track, I do think that beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second half of the year.” From Business Insider’s breakdown of the leanings of each MPC voting member, holding rates unchanged seemed to be the more likely result in the next meeting in August.

Business Insider’s breakdown on each MPC voting member stance

Mark Carney — Hold, confirmed in speech on Tuesday.

Jon Cunliffe — Voted to hold in June, likely to do the same in August.

Ben Broadbent — Voted to hold in June, likely to do the same in August.

Andy Haldane — Voted to hold in June, but has indicated he could back a hike in August in speech on Wednesday.

Ian McCafferty — Hike, likely to do the same in August.

Michael Saunders — Hike, likely to do the same in August.

Gertjan Vlieghe — The MPC’s most dovish member, unlikely to vote anything other than a hold.

Kristin Forbes (outgoing) — Voted to hike in June, will not vote again.

Silvana Tenreyro (incoming) — Unknown as yet to vote, likely to back a hold.

Unknown incoming member — Charlotte Hogg’s replacement is likely to be a BoE insider.

http://uk.businessinsider.com/bank-of-england-could-hike-interest-rates-2017-6

US Crude oil inventories—10.30pm 10 May 2017 Wednesday

US crude inventories decreased -2.45 million barrels on the expectation of -1.2 million drop. Baker Hughes US oil rig count rose another 11 from 747 to 758. Oil production was 9350k barrels per day for week ending 16/06/2017, an increase from 9330k barrels per day in the previous week.

http://www.zerohedge.com/news/2017-06-23/us-oil-rig-count-rises-23rd-straight-week-high-costs-drive-investors-out-permian

http://www.zerohedge.com/news/2017-06-21/wtirbob-pumpndump-after-gasoline-build-production-surge

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

Reserve Bank of New Zealand (RBNZ) Rate Decision + Official Cash Rate—Thursday 22 June 2017 4pm

RBNZ’s Official Cash Rate was kept unchanged at 1.75%. The key sentences in the statement by Governor Wheeler are as follows.

  • The trade-weighted exchange rate has increased by around 3 percent since May, partly in response to higher export prices. A lower New Zealand dollar would help rebalance the growth outlook towards the tradables sector.
  • Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.

http://www.rbnz.govt.nz/news/2017/06/official-cash-rate-unchanged-at-1-75-percent

Coming week: 19 June 2017 – 23 June 2017

A fairly quiet week on the data front.

ECB President Draghi speaks on Monday, BOE Govenor Carney on Tuesday as well as Fed Chair Yellen on Tuesday.

We have CB Consumer Confidence coming out on Tuesday with final US GDP q/q released on Wednesday.

US Crude oil inventories—10.30 pm 28 June 2017 Wednesday

Trade Ideas

FTSE-100 Long

FTSE-100 had corrected from its recent swing high and had taken support at 7400. The bull run is not over until the market says so. Recent Sterling weakness in light of the hung parliament provides an additional tailwind to this perspective.

FTSE global macro

FTSE Daily Chart

WTI short

WTI bullish trend line support was broken to the downside this last week. The weekly chart seemed to suggest that the next level of support would come in at $42 and then $40. A bounce back up to $46 is likely and selling at $46 would be favourable.

  • US continues its relentless increase in oil production and rig count
  • Qatar’s rift with its Middle Eastern neighbours threaten the stability of the OPEC’s production cut agreement.
  • Libya and Nigeria are two countries in the oil cartel that are exempted from production cuts. These two countries had been steadily increasing their oil output.

http://www.cnbc.com/2017/06/08/rising-oil-output-in-libya-and-nigeria-could-rein-in-surging-us-crude-exports-analyst-says.html

WTI CRUDE

WTI Weekly Chart

OIL

WTI Daily Chart

 

The Week Ahead - Mark Carnage and shorting the Kiwi The Week Ahead - Monetary Policy and Sovereignty