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Triple threat Thursday

  • USD - Crude Oil Inventories: 3.3M
  • AUD - Trade Balance: 0.56B
  • CNY - Trade Balance: 282B

The Euro weakened yesterday as news broke that the ECB is expected to cut its inflation outlook at the policy meeting today. Weaker energy prices were cited as the reason. The draft projections showed consumer-price growth at around 1.5 percent each year until 2019, compared to the previous 1.7, 1.6, 1.7 percent. This would support the view that the ECB must be cautious in implementing an exit from the existing monetary stimulus.

Also in the Eurozone, Banco Santander agreed to buy Banco Popular Espanol for a Euro, in order to stop the bank collapsing with the bad property loans. The Single Resolution Board was set up in 2015 to deal with this kind of issue, aiming to deal with Euro-area bank failures and wind them down with minimal taxpayer and financial stability impact.

  • GBP - Parliamentary Elections
  • EUR - Minimum Bid Rate
  • EUR - ECB Press Conference

Today is the biggest day of the week with economic and political decisions coming out of the Eurozone, US and UK. The Eurozone interest rate decision is expected with no change to the benchmark rates. This is followed by the ECB press conference where Draghi is expected to give further insight into the future path of interest rates. Across the pond, ex FBI director, James Comey, will testify in front of the Senate intelligence committee. He is expected to talk about whether President Trump did put pressure on Comey regarding the Russian investigation.  Early leaks of the testimony suggest Comey will describe his conversations with Trump but will fall short of suggesting the President sought to obstruct the federal investigation.

The day closes with the focus switching back to the UK. As the election draws to a close, the exit polls will be released from 10pm, which will be the first indication of the accuracy of the opinion polls. The final opinion polls released this morning show the Conservatives with a more comfortable lead than has recently been seen. The results from the constituencies are expect to be released from around 11pm. The first of the marginal seats is expected about 1am and will start to give an indication of the result. The majority of the seats will be announced between 3-5am giving the markets an idea of the overall result. By 7am, if there is a majority, the attention is expected to switch to the first announcements of the new cabinet, where possible coalitions will be the focus if it is a hung Parliament.  It is expected that the Sterling will strengthen on the back of a conservative majority, with a hung parliament weakening the Pound.