22 Jul 2014
The day ahead and key events - Rabobank
FXStreet (Guatemala) - Analysts at Robobank explained that today will remain largely focused on events, though there are some data points to also look to.
Key Quotes
“Indonesia will officially announce its presidential election result today. The Jakarta Post reports today that despite previous defiance, some key members of Prabowo Subianto’s campaign are publicly preparing to concede defeat to Joko “Jokowi” Widodo, who is expected to be announced the winner with around 52% of the vote. If that is the case, a further rally in IDR (which has already moved up from 12,110 to 11,572 in the last month), may be seen; despite the usual buy-the-rumour-sell-the-fact momentum to such political events, there has been particular uncertainty over this election due to the tight margin and worries over electoral irregularities. However, if Subianto does still dispute the official vote count no such rally is expected”.
“There are no data in the Asian session, but we do have the RBA’s Stevens speaking in Sydney later in the day: will he try to drive home the message that the AUD needs to fall further in public yet again?”
“Efforts at a ceasefire in the Middle East will continue with John Kerry arriving in Cairo to throw the US into the mix. However, reports suggest that the terms he will push are close to those being offered by Turkey and Qatar (who back Hamas) rather than the earlier offer from Egypt, Saudi Arabia, the UAE, and Jordan (who regard Hamas as an enemy). Hopes for a cessation of fighting are therefore hampered by this power struggle; moreover, neither Israel nor Hamas are likely to want to be forced to stop fighting without a clear victory of sorts in the subsequent ceasefire deal – yet a ‘win win’ scenario does not appear a possible option in this case. Notably, for now oil prices are still failing to rise to the ongoing fighting”.
“In Europe the UK releases public-sector borrowing data for June, where the consensus is for a PSNB ex interventions figure of GBP10.5bn, against GBP7.7bn in the same month last year. There is also the UK’s CBI business survey, where total orders are seen down from 11 to 8, selling prices up from 3 to 4, and business optimism down from 33 to 30”.
“European finance ministers will also meet in Brussels to decide on what further action, if any, to take against Russia for its intransigence over the MH17 tragedy. The Kremlin continues to issue pointed denials that it, or pro-Russian separatists in Ukraine, played any part in the attack on the airliner; it is unclear if this vigorous defence will calm anger in Europe, or will only increase resolve to send a powerful message to Moscow via tightening of economic sanctions.”
“In the US we have June CPI, expected at 0.3% MoM headline, 0.2% core, and 2.1% YoY headline and 2.0% core, respectively. Notably, inflation data have not really moved markets much for some time now as their attention has been on economic and labour market weakness rather than potential price pressures. With the FOMC’s gradual shift towards tightening monetary policy ahead, that attitude may begin to change gradually in tandem, and CPI start to move back towards being the key data release that it once was. Elsewhere in the US we will also see the existing home sale report for June, where consensus is a 1.9% MoM increase to 4.99M homes; that’s a positive trend, if true, but significant concerns over the outlook for the housing market still remain (as we explored in a recent special report on the subject.)”
Key Quotes
“Indonesia will officially announce its presidential election result today. The Jakarta Post reports today that despite previous defiance, some key members of Prabowo Subianto’s campaign are publicly preparing to concede defeat to Joko “Jokowi” Widodo, who is expected to be announced the winner with around 52% of the vote. If that is the case, a further rally in IDR (which has already moved up from 12,110 to 11,572 in the last month), may be seen; despite the usual buy-the-rumour-sell-the-fact momentum to such political events, there has been particular uncertainty over this election due to the tight margin and worries over electoral irregularities. However, if Subianto does still dispute the official vote count no such rally is expected”.
“There are no data in the Asian session, but we do have the RBA’s Stevens speaking in Sydney later in the day: will he try to drive home the message that the AUD needs to fall further in public yet again?”
“Efforts at a ceasefire in the Middle East will continue with John Kerry arriving in Cairo to throw the US into the mix. However, reports suggest that the terms he will push are close to those being offered by Turkey and Qatar (who back Hamas) rather than the earlier offer from Egypt, Saudi Arabia, the UAE, and Jordan (who regard Hamas as an enemy). Hopes for a cessation of fighting are therefore hampered by this power struggle; moreover, neither Israel nor Hamas are likely to want to be forced to stop fighting without a clear victory of sorts in the subsequent ceasefire deal – yet a ‘win win’ scenario does not appear a possible option in this case. Notably, for now oil prices are still failing to rise to the ongoing fighting”.
“In Europe the UK releases public-sector borrowing data for June, where the consensus is for a PSNB ex interventions figure of GBP10.5bn, against GBP7.7bn in the same month last year. There is also the UK’s CBI business survey, where total orders are seen down from 11 to 8, selling prices up from 3 to 4, and business optimism down from 33 to 30”.
“European finance ministers will also meet in Brussels to decide on what further action, if any, to take against Russia for its intransigence over the MH17 tragedy. The Kremlin continues to issue pointed denials that it, or pro-Russian separatists in Ukraine, played any part in the attack on the airliner; it is unclear if this vigorous defence will calm anger in Europe, or will only increase resolve to send a powerful message to Moscow via tightening of economic sanctions.”
“In the US we have June CPI, expected at 0.3% MoM headline, 0.2% core, and 2.1% YoY headline and 2.0% core, respectively. Notably, inflation data have not really moved markets much for some time now as their attention has been on economic and labour market weakness rather than potential price pressures. With the FOMC’s gradual shift towards tightening monetary policy ahead, that attitude may begin to change gradually in tandem, and CPI start to move back towards being the key data release that it once was. Elsewhere in the US we will also see the existing home sale report for June, where consensus is a 1.9% MoM increase to 4.99M homes; that’s a positive trend, if true, but significant concerns over the outlook for the housing market still remain (as we explored in a recent special report on the subject.)”