Citi

Our eTrading desk observes a reasonably calm and subdued session overnight, with interbank volumes for the major deliverable pairs on average 10% lower than the 30 day average. We think it should be a quiet morning for the European session with just Germany retail sales. Later today, we are bound to see some headlines, from Fed speakers but also an ECB report on the International Role of the Euro though note that ECB speakers are strictly speaking on climate.

We note a few things to focus on in what was otherwise a quiet session. Fed Governor Brainard gave her two cents on the current debate. TRY found fresh record lows in typically thin liquidity conditions after the NY close, taking note of comments from President Erdogan who said it was “imperative that we lower interest rates”.

We have retraced somewhat since, and expect the currency to remain volatile. KRW markets have also been discussing the central bank though from a rather different angle as the market begins to price in rate hikes, though our strategists think the pricing is too aggressive relative to the US. AUD failed to find inspiration in a Q1 GDP print, while CNH looked through headlines from US/China.

RBC Capital Markets

Overnight: Australia Q1 GDP growth of 1.1% y/y was better than expected. The details were encouraging, with the economy tracking a little above the RBA’s May forecasts, but the Victoria Covid-19 outbreak will keep policymakers cautious. Iron ore prices also have not recovered from the early May drop, though they have stabilised lately.

Day ahead: The highlights of the day’s calendar include Germany retail sales, UK mortgage approvals, and Canada building permits, so not exactly the usual market-moving stuff. There are a number of Fed speakers coming up, as well as ECB President Lagarde accepting a prize.

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