Trading with point and figure

CPI & Retail Sales; OPEC meeting in focus ahead of elections
in Turkey and EU meeting on immigration on Sunday; China/US Trade tensions
continue to cast shadow; number week for bill & bond supply in US next week

- PMIs: Eurozone likely to echo France outturn, improving Services diverging
from tariff related slowdown in Manufacturing; US PMIs seen dipping from
cyclical highs

- Canada CPI: headline set for boost to more than 6-yr high from energy
but core set to be little changed around BoC target; Retail Sales to
see headline drag from Autos, ex-Autos to bounce nicely from March dip

- OPEC: key question is can a compromise agreement to modestly increase
output without an Iranian walkout?

- Charts: OPEC+ production curb compliance; BoE & BoC rate probabilities

..........................................................................

********************
** EVENTS PREVIEW **
********************

The OPEC meeting is very much front and central to today's proceedings, and is accompanied in data terms by the overnight Japan national CPI ahead of flash PMI readings in the Eurozone and the USA, and Canadian CPI and Retail Sales. Unsurprisingly Japan's national CPI confirmed the already published and low May Tokyo CPI, and fits with the BoJ decision last week to downgrade its near-term expectations for CPI to 0.5-1.0% (vs. prior around 1.0%). In terms of the OPEC meeting, as previously suggested, the key question is what form of compromise can be reached between the Russia/Saudi/GCC proposal for a 1.5 Mln bbls increase, and the Iran/Iraq/Algeria/Venezuela preference for no change, with something like two 500K bbls increases likely to be the solution, or perhaps Ecuador's suggestion of a one-off 600K increase, and rationalized as compensating for the output drops in Venezuela and Angola (see chart). A close eye will also be kept on Italy after a very adverse reaction to the appointment of two Eurosceptic MPs to chair the Senate's Budget and Finance committees, and despite reassurances from Economy Minister Tria that the Euro was in no way in question. The more immediate question is whether the meeting of 10 EU countries (though notably none of the Visegrad 4) on Sunday can fashion some form of immigration reform ahead of next week's EU summit. Next week's schedule of data is rather sparse with a further run of surveys (including the German Ifo) accompanying the likely highlight of the week, the various national and Eurozone June CPI readings (headline seen at 2.0% y/y from 1.9%, core at 1.0% vs. prior 1.1%), plus US Durable Goods Orders and Japan's June Tokyo CPI. Next week also sees a bumper $100 Bln of 2, 5 & 7-yr T-notes, $16 Bln of Treasury 2-yr FRN, $90 Bln of 3 & 6-month T-bills (and t.b.c. Monday $35 Bln of 1-mth Bills). Ahead of all that there are the elections in Turkey on Sunday with polls indicating

** World - June 'flash' PMIs **
- As has often been previously observed, forecasts for the flash PMIs generally tend to be quite agnostic, though the presumed drops in French (54.0 vs. prior 54.4), German (56.3 vs. prior 56.9) and Eurozone (55.0 vs. prior 55.5) Manufacturing PMIs is likely predicated on deteriorating sentiment due to the US imposition of steel and aluminium tariffs, with auto sector woes in Germany presumably a further drag. Services PMIs by contrast are seen little changed - the much better than expected French Services PMI, but weaker than expected Manufacturing fit well with the idea that the industrial sector is clearly suffering as a consequence of the US tariffs, but the broader economy is recovering quite smartly from the Q1 weakness. As for the US, the signals from the NY & Philly Fed surveys have been divergent, with a dip to a still historically strong 56.1 on Manufacturing and 56.5 on Services expected.

** Canada - May CPI / April Retail Sales **
- Given the escalating trade tensions with the US, Canada's April Retail Sales may be rather irrelevent in terms of the BoC policy outlook, though they will offer some insight into what sort of contribution will be made to Q2 GDP by personal consumption, with headline sales seen flat due to a drop in Auto Sales, though the ex-Autos measure is een rebounding 0.5% m/m following a 0.2% m/m drop in March. CPI will be of rather more importance, with 0.4% m/m rise expected, paced above all by energy prices, which would see the y/y vault higher to 2.6%, the highest reading since February 2012. However the core CPI measures are seen unchanged at 1.9% and 2.1% y/y respectively, which would be broadly policy neutral; though markets continue to discount a 65% probability of a 25 bps rate hikle to 1.50% at the July 11 policy meeting.
 
Allez Les Blues

24q79xi.png
 
cantagril said:
Missed an oppo this morning for an EG long at .8750 odd - might try it again if it behaves. I'm expecting a big of chop round the numbers so I might get in then.
Click to expand...

Had to go out and left an order in to buy at .8755 and sell at .8780. Just seen that it went down to 60 and then very grudgingly to 75(n)

Might not bother with the rest of today - the sun is out, the sky is blue and there's not a cloud to spoil the view......
 
cantagril said:
Had to go out and left an order in to buy at .8755 and sell at .8780. Just seen that it went down to 60 and then very grudgingly to 75(n)

Might not bother with the rest of today - the sun is out, the sky is blue and there's not a cloud to spoil the view......
Click to expand...

enjoy the sunshine
and beer ..??
 
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