Markets entering a politically-charged 3-week period: Macquarie
2024.06.24 16:46
Investing.com – Strategists at Macquarie noted on Monday that as we step into a politically-charged three-week period, market participants will be closely monitoring elections and debates in France, the UK, as well as key decisions that could affect the US election in November.
The week started with modest to strong losses in Asian stock indexes but gains in index and index futures in the US. In the foreign exchange market, the focus has been on Asia, where traders are watching for signs that Japan’s policy officials might intervene again to push the lower.
This comes as the USD/JPY had neared the 160 mark again late last week and overnight, a point where intervention was seen in April and May.
The week may not see many significant macro releases until Friday when we get the PCE PI inflation data in the US and CPI reports from the euro area. However, the Ifo business climate survey report from Germany was released this morning, showing a decline in business sentiment in June.
Despite this, the is holding steady, potentially because the May Ifo report was seen as outdated, being preceded by last Friday’s preliminary PMI surveys for June.
This week also marks the start of a politically-charged three-week period, with televised election debates in France, the UK, and the US, followed by national elections in France and the UK. Polling and events suggest that electoral trends are intact, with the Conservative Party in the UK continuing to lose appeal while France’s National Rally continues to strengthen in the polls.
In the coming weeks, the sentencing of former US president Donald Trump will take place, followed by the Republican Party’s convention. The choice of Trump’s vice-presidential running mate, to be announced at the end of the convention, will be a key determinant of his success in the November general election.
Apart from political events, speeches from the Fed and ECB are also crucial to watch this week. Tonal shifts suggesting a more dovish disposition by key FOMC members could potentially influence the USD.
This has to be set against other central bank speeches too, such as ECB’s Philip Lane’s speech at a Monetary Policy conference on Wednesday. Meanwhile, the US Treasury will auction 2-year and 5-year bonds on Tuesday and Wednesday, which could set the pace for medium-term USD yields.
