- Vienna hosts ECB and Opec meetings today
- Saudi may broker Opec production target
- ECB may provide details of CSSP and TLTRO
- O/N vol June 23–24 hits a massive 91%
- Click on this link for a replay of our morning call
By Clare MacCarthy
Much attention will be focussed on Vienna today as by a curious coincidence the city hosts two important events – the European Central Bank's June policy-setting meeting and oil cartel Opec's semi-annual conference, its 169th. Japan is also in the news following confirmation by its prime minister, Shinzo Abe, of a widely-expected postponement of a sales tax increase which spurred the yen into fresh gains and wiped some 2.3% off the Nikkei index.
Despite recent advances in the price of crude oil the overarching theme remains oversupply and hopes have been raised the newly-installed Saudi Arabian oil minister might make some progress at today's Opec meeting by brokering a reintroduction of production targets. Even if this should happen, says Saxo Bank's head of commodity strategy, Ole Hansen, it would imply "no fundamental market impact but would still be short-term bullish considering recent failed attempts".
For now, from a technical perspective, crude remains within its established wedge, currently defined by the $48/barrel and $50.9/b outer edges. In addition to the Opec meeting, oil traders are keen to see the EIA inventory report at 1500 GMT today which is expected to show a 2.5 million barrel-per-day decline, in contrast to the latest API inventory tally of a 2.4m/bpd rise.
WTI crude stuck in a $48 to $50.9 range
The ECB meeting is expected to be relatively uneventful but that said, says Michael Boye of Saxo's fixed income trading desk, as well as new Eurozone economic forecasts central bank chief Mario Draghi may provide some further details of its CSSP and TLTRO corporate bond and credit-boosting programmes.
Ahead of the meeting, the Germany 10-year benchmark bund future has made a further attempt to break above 164 despite fresh supply coming in from France and Spain, Boye reports.
Meanwhile, the Asian trading session was characterised by a cautious tone in the wake of
Shinzo Abe's sales tax delay and his promise of unspecified "bold new steps" in the Autumn, reports Christoffer Moltke-Leth from Saxo's Singapore trading desk. The Nikkei index suffered a "pretty massive slide" and dollar-yen was under pressure for most of the day.
Brexit (or rather, the possibility thereof) is commanding an increasing amount of attention and Dan Larsen, of Saxo's FX trading team, advises traders to keep a watchful eye on the opinion polls as these "seem to be driving the market at the moment".
The fear of a British exit from the European Union sent GBPUSD vols sharply higher overnight to with O/N vol of 23-24 June at an incredible 91%, a graphic illustration of the depth of market worries.
The ECB and Opec hold meetings in Vienna today. Don't expect harmony. Photo: iStock
Compiled by Clare MacCarthy, deputy editor at TradingFloor.com
Editor’s note: From the Floor takes advantage of TradingFloor.com's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios.