Morning Commentary: Mayday in June

Foreign Exchange - Morning Commentary

Mayday in June

Share this story:
Facebook
Twitter
LinkedIn
Email
Andrew Kositkun
Andrew Kositkun
Foreign Exchange Head Trader
After much speculation, PM May has officially announced that she will stand down as the leader of her party on June 7.  Focus now shifts to the leadership contest that will formally start the following week. 
 
The leadership contest process starts with Graham Brady, the Chairman of the Committee that represents the rank and file members of the Tory party in Parliament, consulting with the party board to establish a timeline.  Theoretically, any MP that has the support of two other MPs can be nominated.  A series of secret ballots are held, with the least popular candidate knocked out after each round.  After establishing the final two candidates, campaigning is done and ultimately a new leader is chosen.  Generally, this process takes about six weeks and May will stay on until a successor has been announced.   
 
In reality, potential successors have already begun jostling for the position with former Foreign Secretary Boris Johnson the early favorite to take over.  If Boris Johnson doesn’t take over, then it is likely that it will be another hard-Brexit candidate as 86% of the Tory party sees leaving the EU as the most important issue facing the country. The performance of the Brexit Party in the EU parliamentary is likely to inform the path for Brexit as a strong performance should reduce the chances of revoking Article 50.
 
With PM May stepping down, all the options—from leaving with no deal to cancelling Brexit altogether—are on the table.  Over the past three weeks, the pound has been steadily moving lower as the markets began pricing in the possibility that a leadership change will usher in a new leader willing to take a tougher stance.  To this point, Boris Johnson has already announced that the UK must prepare for a no deal exit.  However, if a majority of parliament remains against this option, a second referendum or a new election might be needed to break the deadlock.  Ultimately, the situation remains very fluid. 
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
  • US durable goods orders disappointed, coming in at -2.1% against expectations for a drop of 2.0%.  This comes on the back of yesterday’s PMI release that also disappointed, with both services and manufacturing PMIs missing expectations, coming in at a three year low.   
  • The US has proposed allowing US-based companies to seek anti-subsidy tariffs on products from countries found by the US Treasury Department to be engaging in competitive devaluation of their currencies.  Currently, no country in the world meets this criteria.  This move would be a departure from past US tariff policy and opens up another avenue for the US to impose tariffs. 
  • Oil price dropped sharply yesterday, falling by nearly 6%, on fears that a prolonged trade war will dent oil demand. 
If we can help you with any Foreign Exchange needs, please email foreignexchange@cnb.com or call (800) 447‑4133.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Facebook Twitter LinkedIn Google Plus YouTube
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Unsubscribe from this list  |  Update email preferences
This message has been sent to bank@banking.offers.report. Please do not reply to this email. To ensure the delivery of future emails, please add foreignexchange@emails.cnb.com to your email address book or safe sender list.
Copyright ©2019 City National Bank – All Rights Reserved.
350 South Grand Avenue, 12th Floor, Los Angeles, CA 90071
City National Bank is a subsidiary of Royal Bank of Canada.
TERMS & CONDITIONS  |  PRIVACY STATEMENT
Equal Housing Lender
NMLSR ID# 536994 | City National Bank Member FDIC
                                                           

Comments

Popular posts from this blog

Fidelity: Bollinger band stock signal

Viewpoints: What to do after a data breach