It’s all about expectations. So, even if economic activity has been brighter in April and May, things seem to be running into the ground in June and that does not bode well for the outlook for Q3. I wouldn’t call a bottom just yet.
This article was written by Justin Low at www.forexlive.com.
Retail sales volumes continued to decline in the year to June, even if the pace has slowed slightly. The expectations reading for the month ahead is for no change (0) at least. However, the continued decline in sales volumes speaks to the difficulty faced by retailers at the moment as high inflation continues to impact demand negatively.
This article was written by Justin Low at www.forexlive.com.
Kremlin spokesman Dmitry Peskov also said that Wagner fighters who didn’t take part in the uprising will sign contracts with the Ministry of Defense while those who did take part won’t be charged.
There was no word on changes as the Ministry of Defense but earlier rumours suggested Shoigu would be replaced.
Peskov said Putin will not make any further comment on the issue and the invasion of Ukraine will continue as normal.
I wouldn’t entirely believe any of this until Prigozhin himself acknowledges it and he’s certainly going to be looking over his shoulder for a long time.
This article was written by Adam Button at www.forexlive.com.
Belarus President Lukashenko, acting with Putin, said he spoke to Prigozhin and put an agreement on the table that would guarantee the safety of Wagner fighters.
To me, this sounds more like a deescalation than a solution. Perhaps Prigozhin thought that other wings of the Russian military would join him or maybe he’s just playing for time. Until the weapons are laid down, this looks more like a standoff. It’s hard to imagine there’s any way to return to last week’s status quo in Russia, whatever that is.
At the moment , I’d say the risks of a weekend regime change in Russia just plummeted but it’s still only Saturday.
This article was written by Adam Button at www.forexlive.com.
Tourism data cited on China’s state TV(CCTV) reported travel during the June 22-24 Dragon Boat Festival holiday was up on 2022 but down 22.8% from the pre-COVID levels of 2019.
Meanwhile, at least two South Korean carriers have cut flights to and from China, citing lower demand and sour relations between the two countries. Yonhap reported on flight suspensions on some routes through late October by Korean Air Lines and Asiana Airlines.
Markets are monitoring data from China for signs of progress for the economy as its bounce from COVID dissipates. Eyes are also on stimulus measures. The latest were policy rates cuts (for example the central bankcut to LPRs), which were small in magnitude, more heavy-hitting fiscal stimulus would ease market concern a little more than these.
China’s leadership is more focused on political issues, support for Putin and threats to Taiwan are two, than the economy at present.
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Anyway, I’ll let y’all get back to figuring out what’s going on in the Russian coup
This article was written by Eamonn Sheridan at www.forexlive.com.
Reports are scattered and unreliable but helicopters are engaging the column and images suggest three of them were shot down. There are scattered videos of battles along the highways and other videos suggesting that other parts of the Russian military have switched sides.
“We will destroy everything around us, we are all ready to die – all 25 thousand, and then another 25 thousand, because the Russian people must be liberated,“ said Prigozhin who regularly publishes audio statements on Telegram.
Putin addressed the nation and here’s the full text:
I appeal to the citizens of Russia, to the personnel of the armed forces, law enforcement and security services, fighters and commanders currently fighting on their positions, repelling the enemy attacks, doing it heroically.
“I spoke to the commanders in all directions last night. I appeal also to those who were deceptively pulled into the criminal adventure, pushed towards a serious crime of an armed mutiny.
“Russia today is leading the most difficult war for its future, repelling the aggression of neo-Nazis and their handlers. Against us, the whole military, economical and information machines of the west are turned. We fight for the lives and security of our people. For our sovereignty and independence. The right to remain Russia, a state with 1,000 years of history.
“It’s a battle where the fate of our people is decided and requires uniting of all our forces, unity, consolidation and responsibility. Everything else that weakens us must be shoved to the side.
“Our external enemies are using any arguments to undermine us from within. Thus, actions splitting our unity is a betrayal of our people, our combat brothers who fight now at the frontline.
“It’s a strike in the back of our country and our people. Exactly this strike was dealt in 1917 when the country was in world war one, but its victory was stolen. Intrigues, and arguments behind the army’s back turned out to be the greatest catastrophe, destruction of the army and the state, loss of huge territories, resulting in a tragedy and a civil war. Russians were killing Russians, brothers killing brothers. But the beneficiaries were various political chevaliers of fortune and foreign powers who divided the country, and tore it into parts.
“We will not let this happen. We will protect our people and state from any threats, including internal betrayal.
“What we’re facing is exactly internal betrayal. Extraordinary ambitions and personal interests led to treason. Treason of their own country and people and of the case that fighters of Wagner were dying for alongside our soldiers. Heroes who liberated Soledar and Artemivsk, towns and cities of the Donbas. They fought and were giving lives to Novorossiya and the unity of the Russian world.
“Their name and glory were also betrayed by those who are trying to organise the mutiny, pushing the country into anarchy and brother-killing, to a defeat, in the end, and capitulation.
“Repeat: any internal mutiny is a deadly threat to our state, to us as a nation. It’s a strike against our nation, our people. And our actions to defend the fatherland from such a threat will be brutal. Anyone who consciously went on the path of betrayal, who prepared the armed mutiny, went on the path of blackmail and terrorist actions, will take an inevitable punishment. They will answer to the law and our people.
“The armed forces and other departments were properly instructed. Extra anti-terrorist measures are now being implemented in Moscow, Moscow region, and a number of other regions. Decisive actions will be taken to stabilise the situation in Rostov-on-Don.
“It remains difficult. The operation of civilian and military control departments is practically blocked. As a president of Russia and the supreme commander, as a citizen of Russia, I will do everything to defend the country, protect the constitution, lives and safety, liberty of the citizens.
“Those who prepared the military mutiny, who raise weapons against combat brothers, have betrayed Russia, and will pay for this. And those who are being pulled into the crime, I’m asking to not make this crucial, tragic, unrepeatable mistake. Do the one right choice – stop participating in criminal actions.
“I believe that we will defend and preserve what’s sacred for us. And together with the motherland, we will overcome all challenges, and become even stronger.”
This is a truly precarious moment in world history. Putin’s repeated references to Russian history and the survival of the statemake me fearful of how far he will go to defend his position.
Initially, Wagner comments were directed at the Russian defense ministry and possible change there but they’re increasingly directed at Putin himself.
Obviously, this is a mullti-faceted development but it’s an incredible development for Ukraine. So far there are no indications of change at the front lines but you have to imagine that Ukraine will regroup for a stronger offensive, especially if Wagner forces (and those who are joining them) withdraw.
The scope of possibilities here is too wide to even contemplate but I’d much rather be holding safe haven assets when the market opens.
This article was written by Adam Button at www.forexlive.com.
In a video last week, Wagner founder Yevgeny Prigozhin appeared to say that his 25,000 strong militia was heading to Moscow to oust the leadership of the defense ministry.
„Those who destroyed our lads, who destroyed the lives of many tens of thousands of Russian soldiers, will be punished. I ask that no one offer resistance… We will consider anyone who tries to resist a threat and quickly destroy them,“ he said.
Not surprisingly, Russian officials didn’t take that well and today accused Prigozhin of armed mutiny.
They appear to be genuinely afraid of some kind of civil war after the deputy commander of Russia’s forces said in a video to „stop the columns and return them to their permanent bases.“
The Russian Federal Security Service (FSB) also released a statement saying not to obey “Criminal and Dangerous Orders by Yevgeny Prigozhin and to assist the Russian Armed Forces and FSB in apprehending him alongside other Wagner Commanders.”
Along with that, there are all kinds of rumours about what’s happening on the ground.
This could amount to nothing or to civil war but keep a very close eye on Russia this weekend.
This article was written by Adam Button at www.forexlive.com.
Markets:
The US dollar was in demand once again, despite falling Treasury yields. Some of that might have been a result of relative values as bund yields fell much further than Treasuries.
In any case, it was a classic risk-off day with the exception that the yen couldn’t sustain a bid. That’s a red flag because there was some initial JPY-buying after the hot Japan core CPI print earlier. Some of that extended early in US trade with USD/JPY falling to a session low of 142.77 but it was a quick turn and 100 pip rally from there to a new 9-month high.
More broadly, the peak of the US dollar strength was early in North American trade as the commodity currencies sagged and cable hit 1.2688 alongside heavy equity selling. The moves ebbed from there as buyers waded into some stocks and oil bounced more than $2. USD/CAD hit a 9-month low yesterday but 80 pips today before recovering about half the move.
AUD/USD struggled but the damage was mostly done early in the day and it sagged to the finish line. A week ago, it looked like AUD/USD could be breakout out to the upside but the lack of meaningful fiscal stimulus from China rapidly turned the tide and the pair is right back into the middle of the four-month range. Today was particularly bruising with a 75 pip loss.
Notably, today is also the seven-year anniversary of Brexit and it remains down about 20 big figures against the dollar since. Cable softened in Asia but treaded water afterwards.
Have a wonderful weekend.
This article was written by Adam Button at www.forexlive.com.
On the day:
On the week:
Here’s an early hint: The first two weeks of July are, seasonally, the strongest time of the year.
This article was written by Adam Button at www.forexlive.com.
„We are maintaining a long EUR/USD trade idea. The pair retested the top
of this year’s trading range between 1.0500 and 1.1000, and we expect
the pair to move closer to the year to date high from April at just
below the 1.1100-level,“ MUFG notes.
„We are maintaining our long AUD/NZD trade idea to reflect expectations
for narrowing policy divergence between the RBA and RBNZ,“ MUFG adds.
MUFG sees three reasons why sustained strength in the USD is unlikely.
In summary, MUFG suggests that the US dollar’s strength may not be
sustained in the longer term due to the uncertainty surrounding
tightening cycles and the sensitivity to economic data. They believe
that if the FOMC continues to pause its tightening, and if the economic
data supports this stance, it could result in a weakening of the US
dollar.
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This article was written by Adam Button at www.forexlive.com.