June 2017

June 17, 2017 (Commerzbank AG) – Euro zone: Recovery illusion

The ECB’s billions are increasingly filtering through to the real economy, thus putting the euro zone on track for several years of decent growth in the range 1½% to 2%. In many quarters this will be seen as a restoration of economic health. Anti-establishment political forces are losing ground, giving way to renewed proposals for further EU integration like those championed by France’s new president, and financial markets will show their approval. But after a period of decent growth, lasting perhaps two or three years, which suffices to reduce the degree of excess productive capacity, the spotlight will again fall on the economic weaknesses resulting from crisis-management policies designed to preserve the status quo rather than take the economy forward.

Outlook for the week of 18 to 23 June 2017

  • Economic data: The PMIs in the euro zone are expected to have declined in June. In the US, purchases of single-family homes have probably recovered following their April dip.
  • Bond market: With the Fed’s rate decision out of the way, USD interest rate swaps and also US Treasuries are in for some respite. In the euro area, the balance of directional risks in Bunds is to the downside rather than still lower 10y yields
  • FX market: Fed has maintained its view that the key rate will be raised a further four times until year-end 2018 whereas the market is pricing in far fewer rate hikes.
  • Equity market: For the coming summer months several bear trends suggest a DAX consolidation is on the cards.
  • Commodity market: We anticipate a temporary recovery in oil prices, possibly as early as next week, though the longer-term trend is downwards.


June 2, 2017 (Tempus, Inc.) – The U.S. dollar held flat ranges overnight as the fallout from yesterday’s news was digested by markets. Yesterday afternoon President Trump announced that the United States would exit the Paris Climate Accord. While the decision was met with widespread condemnation from world leaders and high-profile business executives, the President made the argument that the leaving the accord would benefit U.S. businesses. Equity markets have yet to take notice. And while many currency analysts around the globe slammed the decision, fx traders shrugged off the news and focused their attention to today’s data releases.

The greenback is losing across the board in early trading following a dismal jobs report. The U.S. economy only added 138K jobs in the month of May, missing expectation of 182K rise. In addition, March and April’s readings were downwardly revised by a total of 66K jobs.

Despite the poor data, current Fed Futures show that odds the Federal Reserve will raise interest rates later this month has stayed constant at around 90%.



After trading in sideways ranges overnight, the Euro jumped to a 7-month high against the U.S. dollar following poor U.S. jobs data. There was little data released today in the Eurozone so EUR/USD will trade with U.S. headlines.

The European Central Bank will dominate next week. The central bank will make their interest rate decision next week. While no policy change is expected, analysts will pour over Mario Draghi’s statement for clues as to whether the Bank is gearing up towards lessening their easing.



The British pound has taken advantage of a generally weak dollar this morning, rising as much as 50 basis points before ceding some of those gains. Attention will shift back to next week’s snap parliamentary elections in the U.K. While Theresa May and her Conservative party are expected to hold onto a majority, traders are not willing to evacuate the chances of a surprise victory by the Labour party as polls have tightened in recent days.