Macro Roundup (Jun 19)

SHANGHAI, Jun 19 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

The US dollar index inched up on Tuesday as the euro fell after European Central Bank chief Mario Draghi said that policymakers will provide more stimulus if inflation does not pick up.

The Federal Open Market Committee began its two-day meeting on Tuesday, and will issue a statement and economic projections at the close of Wednesday’s session.

LME and SHFE base metals traded higher across the board after a "very good" telephone conversation between US President Donald Trump and his Chinese counterpart, Xi Jinping on Tuesday night.

Trump and Xi will also meet at next week’s G20 summit in Japan, and teams from two sides will begin talks prior to the meeting, which renewed hopes for a US-China trade deal and bolstered the market.

LME lead and copper climbed 1.8%, zinc, tin and nickel advanced 1.6% and aluminium gained 1.1% on Monday. SHFE nickel rose 1.6%, copper crept up 1.4%, zinc went up 1.3%, lead gained 0.8%, tin and aluminium advanced 0.6% overnight.

US-China trade optimism, together with tension in the Middle East after last week’s tanker attacks and the US' plan to send more troops to the Middle East, bolstered oil prices on Tuesday.

The euro area's surplus in trade with the rest of the world narrowed sharply in April, dragged by a large drop in exports.

According to Eurostat, and in seasonally adjusted terms, the surplus narrowed by roughly 18% month on month to a five-month low of €15.3 billion, as euro area exports fell by 2.4% to €192.6 billion and imports declined by 0.8% to €177.3 billion.

On a yearly basis, exports were up by roughly 2.6% and imports by 4.4%.

The area’s consumer inflation in May came in at 1.2% on a yearly basis, confirming the flash estimate, according to Eurostat’s final reading of Eurozone consumer price index (CPI) report.

On a monthly basis, the bloc’s CPI figure rose 0.1% versus 0.2% expectations and 0.7% previous.

For the largest economy in the bloc, the mood among German investors deteriorated sharply in June, a survey showed on Tuesday, with the ZEW institute pointing to recent weak economic data and an escalating trade dispute between China and the US.

ZEW said its monthly survey showed economic sentiment among investors plunged to -21.1 from -2.1 in May. Economists had expected a drop to -5.9. This was the lowest level since November 2018 and marked the second consecutive monthly drop.

US homebuilding unexpectedly fell in May, but data for the prior two months was revised higher and building permits increased, suggesting that the housing market was drawing some support from a sharp decline in mortgage rates.

Housing starts dropped 0.9% to a seasonally adjusted annual rate of 1.269 million units last month amid a drop in the construction of single-family housing units, the Commerce Department said on Tuesday.

Building permits rose 0.3% to a rate of 1.294 million units in May. It was the second straight monthly increase in permits. Building permits have been weak this year, with much of the decline concentrated in the single-family housing segment. The housing market hit a soft patch last year and has been a drag on economic growth for five straight quarters.

The American Petroleum Institute (API) on Tuesday reported a decrease of 812,000 barrels in the US crude oil inventories for the week through June 14, after an increase of 4.85 million barrels in the previous week.

Day ahead

Key developments today include the speech that Draghi will deliver at the closing ceremony of the ECB Forum in Sintra, Portugal and US weekly crude inventory data from the Energy Information Administration (EIA).