Investment Bank Outlook 30-06-2021
Citi
England’s jubilant win at the knockout Euro game last night is sharp contrast to price action in financial markets. Markets traded close to flat as we wait for the second half of the week, including US equities, yields and the USD. Positioning and month end dynamics continue to provide intraday choppiness but there is not much to report. Despite a USD bid tone yesterday, there has been limited follow through with EURUSD anchored around the 1.19 handle.
China manufacturing PMI overnight was in line, but services PMI disappointed. Citi Economics thinks that peak growth momentum may have passed, but USDCNH did not need to acknowledge this. Up ahead, it should be a quiet morning with just Eurozone CPI at 10:00 BST. GBP may see some hawkish headlines from BoE’s Haldane at 12:00 BST but as an outgoing member, his views do not necessarily reflect the MPC.
RBC Capital Markets
Day ahead: The data in focus today are Euro area ‘flash’ inflation (see EUR), Germany unemployment report, Poland CPI, US ADP employment report, and Canada April GDP (see CAD) among others. EUR: We expect euro area headline inflation (Wednesday) to slip slightly to 1.8% y/y as energy price base effects weaken (petrol prices rose 5.1 cents between May and June 2020, compared to just 1.5 cents this year). Headline inflation however is likely to take another leg higher in the autumn as favourable base effects related to last year’s German VAT cut come into force. While leading indicators suggest some risk of services and retail price increases as economies reopen, we expect core inflation to remain muted until labour market slack has been fully absorbed.
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