Danske Research Team
Danske Bank A/S
Market movers today
The key event today for markets will be the US CPI release for June, which will give insights whether inflationary pressures start to abate. Consensus is looking for continued high CPI inflation of 4.9%, but the monthly increase in core CPI is expected to slow to 0.4% m/m from 0.7% m/m in May. Overall, we expect inflation pressures in the US to remain elevated and settle at a higher level than before the pandemic, but not spin out of control, see Research US - Higher inflation but not spinning out of control due to still well-behaved expectations, 14 June.
The 60 second overview
Trade relations: In order not to endanger progress on a minimum global corporate tax deal, the EU decided to postpone the release of its controversial digital levy that has met stiff opposition from Washington. It is another sign that transatlantic relations are on the mend after the EU and US already last month struck an agreement on a long-running Airbus-Boeing subsidy dispute. Separately, the Biden administration is also mulling proposals for a digital trade agreement covering Indo-Pacific economies as a way to check China's influence in the region.
Equities: Asian shares are up this morning, after S&P 500 and tech-heavy Nasdaq 100 closed at new highs yesterday. US banks will kick off the Q2 earnings season today and expectations for solid reports are underpinning the stock rally. Big dividends from European banks may be off the table after ECB official Margarita Delgado said the central bank could take steps to stop excessive pay-outs.
FI: European bond yields continue to decline on the back of the statements from various ECB officials and despite the significant supply this week.
FX: Monday proved a quiet start to the week for FX majors. G10 bilateral currency moves were kept within +/- 1 standard deviation for the session leaving EUR/USD close to 1.1850, EUR/NOK around 10.30, EUR/SEK just shy of 10.20, and EUR/GBP close to 0.8550.
Credit: Credit indices were aligned with relatively stable equity markets on Monday. iTraxx Xover was roughly flat (closed at 232.7bp) and iTraxx Main was also flat (closed at 46.6bp). HY cash bonds tightened slightly (-1.4bp) IG cash bonds were also marginally tighter (-0.8bp).
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AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.