US Open Preview – Pound gains on BoE rate hike comments
May 22, 2018 12:26 pmVideo
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Here are the latest developments in global markets:
Day ahead: Political & trade developments eyed; Zuckerberg testifies before the European Parliament
Tuesday’s calendar has not much to offer in terms of data in the remainder of the day, with Canadian wholesale sales and the API’s weekly report on US crude oil stocks attracting interest.
Meanwhile in the Eurozone, political risks in Italy are expected to continue to weigh on investors’ sentiment as the two populist parties, the anti-establishment Five Star Movement and the right-wing League who managed to reach a coalition deal last week, seek to reform the country’s fiscal policy to the detriment of the EU’s spending plans. Particularly, the Eurosceptic parties are said to oppose the bloc’s immigration program as well as its Stability and Growth pact. Giuseppe Conte has been proposed by the parties to take over as the next Prime Minister during yesterday’s meeting with the Italian President, Sergio Mattarella.
Updates on the Brexit front could move the pound as negotiations resume this week in Brussels following Theresa May’s “backstop” option to keep the UK tied to EU customs rules after the transition deal expires in December 2020 in an attempt to avoid a harder border in Northern Ireland if the sides fail to reach an agreement on the topic in time. Wednesday’s CPI readings out of the UK, though, are likely to be of greater interest to traders for now.
Trade developments will remain in the spotlight as the US and China decided on Sunday to suspend import tariffs and continue negotiations instead. Still, escalation in tensions between the countries is not expected ahead of a crucial US-North Korea summit on June 12. China’s decision to cut import duties on cars from 25% to 15% (effective from July 1) today also showed that China has no intentions to start a trade fight.
In equity markets, a testimony by Facebook’s Chief Executive, Mark Zuckerberg before the European Parliament today at 1615 GMT will gather attention. Zuckerberg is expected to acknowledge the inability of the tech company to protect data privacy amid an improper share of data with Cambridge Analytica – a British political consulting firm linked to Trump’s 2016 election campaign which shut down in April. That follows his apologizing testimony in front of the US Congress in the previous month, where his statements did not sound as harmful to company’s image as markets expected, boosting Facebook’s shares instead. That said, questions by European politicians could be more challenging than those asked by US lawmakers given that the EU’s privacy rules are more restrictive than those in the US.
US weekly crude oil stock readings reported by the American Petroleum Institute will have the potential to add volatility to crude prices at 1330 GMT. Should the numbers show a build in inventories, prices could erase earlier gains.
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