June 20, 2023

“EURUSD advanced this morning as the US Dollar is currently experiencing a broad retreat, temporarily halting its three-day recovery. Markets have adopted a cautious approach ahead of mid-tier US data and several key central bank events later this week, including the BoE policy decision, as well as Fed Chair Powell’s semi-annual testimony to Congress.”

Tim Hallinan – Trading Director

Main Headlines

UBS Group AG is expected to face substantial financial penalties in connection with Credit Suisse’s mishandling of Archegos Capital. The investigations conducted by regulators from the UK, Switzerland, and the US have concluded. UBS has requested the US Federal Reserve, the Swiss Financial Market Supervisory Authority, and the UK’s Prudential Regulation Authority to jointly publish their findings and announce any penalties at the end of July.

Industry data released today revealed a slight easing of British grocery inflation for the third consecutive month in June, providing some relief for consumers who have been burdened by a persistent cost of living crisis for the past year. Kantar, a market researcher, reported that annual grocery inflation stood at 16.5% in the four weeks leading up to June 11, down from 17.2% in May. The highest price increases were observed for items such as eggs, cooking sauces, and frozen potatoes.


Sterling is stronger against the Dollar and weaker against Euro this morning. In May, British food manufacturers experienced their first decline in production costs since 2016, as lower commodity and energy prices, as well as reduced shipping costs, outweighed the increase in wage bills, according to a report by Lloyds Bank. Although manufacturers’ wage costs rose more than twice as fast as the average, the United Nations’ food price index indicated that commodity prices were 21% lower than they were a year ago.


Euro is well bid against most major currencies overnight. Philip Lane, the chief economist of the European Central Bank, stated yesterday that the ECB is likely to raise interest rates once again next month. However, he emphasized that it is premature to predict the outcome of the September meeting, which will be determined by forthcoming data. Last week, the ECB raised borrowing costs in the euro zone to their highest level in 22 years, citing persistently high inflation as a strong indication for another rate hike in the following month.


The Dollar is weaker than most major currencies in the early morning trade. US Secretary of State Antony Blinken confirmed that discussions between the United States and China regarding the release of three detained US citizens are ongoing. Blinken refrained from providing specific details but stated that both countries are actively engaged in the matter. He emphasized that the United States remains committed to resolving all three cases and mentioned that he extensively addressed the individual situations of the detained Americans during his visit to Beijing, which marked a rare occurrence.


European stock markets opened lower this morning, reflecting a wavering investor confidence. The Stoxx 600 index declined by 0.09%, with most sectors experiencing negative trends. Automobile stocks recorded the biggest losses, down 0.65%, while tech stocks were down 0.4%. Conversely, defensive sectors such as utilities and healthcare saw gains of 0.6% and 0.4%, respectively. US markets were closed yesterday in observance of the Juneteenth holiday, but overnight stock futures indicated a slight decrease as investors anticipated a shortened trading week. In Asia-Pacific markets, investors reacted to China’s central bank decision to reduce its one-year and five-year loan prime rate, resulting in lower trading activity.

Main Economic Data/Central Banks/Government (All Times CET)

7:00 a.m.: Finland May Unemployment Rate
8:00 a.m.: Germany May PPI
8:00 a.m.: Switzerland May Trade Date
10:00 a.m.: ECB April Current Account
11:00 a.m.: Euro Area April Construction Output
11:00 a.m.: Hungary May Unemployment Rate
2:00 p.m.: Hungary Central Bank Rate Decision
Slovakia Unemployment Rate

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