Market Drivers June 16, 2015

EU Court ruling upholds bond buying
UK CPI cooler knock cable from 1.5600
EZ ZEW 31.5 vs. 37.5
Nikkei -0.64% Europe -0.95%
Oil $60/bbl
Gold $1183/oz.

Europe and Asia:
AUD MPC Minutes confirm dovish bias
GBP UK CPI 0.9% vs 1.0%
EUR ZEW 31.5 vs. 37.5

North America:
USD Housing Starts and Building Permits 8:30

Both euro and cable saw a mild reversal in European session when economic news missed its mark sending EUR/USD back from 1.1300 level and cable off the 1.5600 figure. Earlier euro saw a sharp spike to 1.1329 on news that the European Court ruled that the bond buying program instituted by the ECB is legal.

The EU Court of Justice ruled that the OMT program does not exceed the power of the ECB putting the matter to rest after the German court passed the case to it last year, The euro rallied on the news, but the reaction quickly dissipated as the more immediate concerns of talks with Greece weighed on trader’s minds.

The impasse with Greece and the looming prospect of bankruptcy for the country also affected the investor sentiment in the region with ZEW survey missing its mark at 31.5 versu 37.5. Investor sentiment stood in sharp contrast to the recent rhetoric from ECB which continues to state that conditions in the region are improving. The drop in ZEW was the third consecutive monthly decline suggesting that growth in the EZ may be stalling.

Meanwhile in UK the CPI data printed a bit cooler with core CPI coming in at 0.9% versus 1.0%. The input component saw the largest decrease as prices fell -0.9% vs. 0.7% eyed. Cable tumbled to a low of 1.5545 in the aftermath of the release but steadied at that level. The pair has seen a strong recovery over the past few weeks but today’s news suggests that some of the upside momentum may dissipate as there is little need for BOE to consider normalizing rates until 2016 at the earliest.

In North America today the calendar is once again light with only Housing Starts and Building Permits on tap. The range bound conditions that we saw in Europe and Asian session may very well continue as volatility remains compressed ahead of the FOMC meeting tomorrow which promises to be the marquee event of the week. In the meantime we may tread water until then.

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