Friday June 2, 2017 - 16:28:45 GMT
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British Election, ECB Decision And U.S. Jobs Surprise
John M. Bland, MBA
U.K. Vote Has Become A Horse Race When PM Theresa May called for a “Snap Election ” several weeks ago, the Conservatives initially were 20 percentage points ahead of Labour and seen easily picking up a number of extra seats in the election slated for Thursday June 8. Somehow the Conservatives lead in one poll has dwindled to as low as 3 percentage points late in the week just ending. The talk is that many are unhappy with the Conservative Party, but prefer current PM May over Labour Party Leader Jeremy Corbyn . Our private polls have been showing May and the Conservatives with a comfortable lead. They recently showed much the same for the pro-Brexit side in that referendum. We are cautious about what to expect. Markets would prefer to see PM May with a clear mandate heading into what will be tough negotiations with Europe over Brexit conditions. The GBP would not like to see May lose power.
ECB Expected To Hold Policy Steady On Thursday The ECB is scheduled to announce its latest monetary policy decision on Thursday as well. We have been getting mixed signals from the European central Bank recently with President Draghi continuing to speak out in favor of existing policies which are supportive of the Eurozone economy. On the other hand, there have been several “leaks” from unnamed sources suggesting that the central bank is preparing to consider a policy tightening at this conference. The opposing narratives suggest that there must be a policy conflict at the central bank. I feel Draghi will have the final say (and votes) on policy.
Surprising Weakness In U.S. May Employment Report Friday saw the markets blindsided by weaker than expected May payroll data. Following an outsized gain of 253K in the ADP May employment estimate, a Non-Farm Payroll gain of only 138K disappointed traders especially after the data for the previous two months were revised down by a combined 66K. Furthermore, Average Hourly Earnings remained mired at the 0.2% level where they have been for years. The rolling three month average for Jobs growth for the last four months has been 204K, 166K, 148K and 121K. This pattern could be seen as worrisome by policy-makers. The question now must be whether these data will impact the Fed policy decision on June 14, which was seen as a lock for a Fed rate hike. Following the data, the yield on the 10-yr note made a new yearly low (briefly) of 2.15%.
Amazing Trader EVENT RISK Calendar:
Mon 5 Jun
All Day Global Service PMIs
Tue 6 Jun
04:30 AU- Reserve Bank Decision
Wed 7 Jun
09:00 EZ- GDP
14:30 US- EIA Crude
23:30 JP- GDP
Thu 8 Jun
00:00 UK- Elections
11:45 EZ- ECB Decision
Fri 9 Jun
12:30 CA- Employment
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland co-founding partner www.global-view.com
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