Brexit Talks

Theresa May doesn’t yet have a deal with the DUP but that is not getting in the way of the official commencement of Brexit talks on Monday. Britain’s negotiating stance looks a little muddled. The official position remains that laid out by Mrs May in January, but increasingly we are seeing calls for a softer stance, Philip Hammond, the UK chancellor, has stepped up calls for jobs and the economy to be at the centre of talks – a sign that he is prepared to push for a softer Brexit.

Sterling could be sensitive to news from the discussions as traders look for signs of what kind of deal Britain is going to get.

Canada Data

canada fx
Canada’s dollar surged last week as the country’s central bank signalled it could be a lot closer to raising interest rates than previously expected. USDCAD dropped to a four month low as the loonie ramped up on speculation the Bank of Canada will start to tighten. Senior deputy governor Carolyn Wilkins said last week that policymakers had “reasons to be encouraged” about the nation’s economy, comments seen a significantly hawkish and later backed up by governor Stephen Poloz.

That puts the spotlight on this week’s batch of economic data from Canada even more as trader parse the information for clues about just when the BoC might pull the trigger. Wholesale sales numbers are due on Tuesday, retail sales on Thursday, and key CPI inflation data is out on Friday.

Eurozone PMIS

As the Eurozone recovery continues to show signs of improvement, traders will be watching for more signals from the latest round of flash PMIs on Friday. The European Central Bank recently upgraded its growth outlook for the bloc but downgraded its inflation forecast.

Manufacturing and services surveys for June will help complete the market’s view of where Q2 growth is likely to be and this could drive some action in euro pairs.

UK Housebuilders

Full-year results from Berkeley Group Holdings could set the tone for UK housebuilders as investors try to figure out how Brexit and the general election result are likely to impact the property sector. Last week’s upbeat update from Bellway suggests momentum is being maintained although average prices are coming under pressure. Berkeley Group Holdings (BKG) reports on Wednesday.

Oil Stocks

The weekly crude oil inventories from the US are in focus as the market grapples with a prolonged supply glut that is continuing to weigh on prices. In spite of OPEC’s extension of its production cuts, Brent crude and WTI prices have been hit as traders remain bearish.

Last week the International Energy Agency warned that while demand will outpace supply later in the year, excess inventories will persist well into 2018, a fact that it said should make “sobering reading” for producers looking to restrain supply.

Source: ETX Capital

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