Daily Market Report 26/06/2013

Following a fairly sleepy Monday, the markets looked towards the rest of the week for some indication as to whether or not last week’s volatility would continue.

Trying his best to steady the ship, Mario Draghi spoke in Berlin stating that monetary policy in the EU would remain flexible so that any additional support could be applied if necessary. Analysts reading between the lines would most likely find Draghi’s ‘Stable Euro, String Europe’ stance laughable in the face of rising bond yields and zero growth. That said the strength of the euro remains frustratingly stable.

The pound rallied initially on Tuesday morning following data that highlighted an increase in UK mortgage approvals up just over 3,000 from the month before. However during the afternoon session, the pound’s early momentum was halted against the euro and bullishly reversed against the US Dollar as the US posted strong housing data of their own, along with a tremendously strong consumer confidence figure. This saw cable drop about 0.6% during the afternoon bouncing off the 1.54 level.

Wednesday will see another busy day in the markets. As the stock markets begin to stabilise following the Fed’s stance on fiscal stimulus in the US remains under speculation, all eyes will be on the Bank of England’s financial stability report. One could be forgiven for assuming that this report may be rather kind to the UK’s economy so that the stock markets are not shaken any more but moreover; so Mark Carney has a chance to get his feet under the desk before taking flak from all sides over the UK’s limping economy.

We have had mixed data from Europe today with Gfk consumer confidence from Germany coming higher than the expected 6.5 at 6.8 and data from France showing that the economy remained in recession with official figures showing a contraction of 0.2% in the first quarter.

For the rest of the day markets will be focusing on Mario Draghi’s press conference in Paris, Bank of England Governor Mervyn Kings speech in London and revised estimates on first quarter GDP from the US. Expectations are for growth to increase to 2.4% from 0.4% from the previous three months. A good figure here would prompt the US dollar to strengthen further.

Key Announcements:

10.30am – GBP – BoE Governor King Speech.

10.30am – GBP – Financial Stability Report.

12.00pm – USD – MBA Mortgage Applications (21st Jun): Previous figures showed a fall of -3.3%.

12.30pm – GBP – Government Spending Review.

13.30pm – USD – GDP Annualised (Q1): Expected to rise to 2.4%.

13.30pm – USD – Personal Consumption Expenditures Prices (Q1): Expected to come in at 1%.