June 23 - Markit manufacturing Flash PMI data for June from Germany and the Euro Zone are expected to top the agenda on Thursday, while U.S. Jobless Claims are expected to show a rise from the previous week.
It's 1630 in London, 1130 in New York. Investors count down to the Fed and comments from Chairman Ben Bernanke as the impact of the Greek confidence vote wanes. Ahead of the Fed rate decision and quarterly press briefing with Chairman Ben Bernanke, we asked Neil Mellor, FX Strategist at Bank of New York Mellon, what the Dollar impact might be. You generally have to see the coming year as Dollar positive if you believe that the market's going to start speculating about US monetary policy. Generally, when the market's speculating about the extraordinary measures introduced by the Fed, it's been associated with Dollar weakness. And that clearly is not the case at the moment. The Federal Reserve is likely to make clear later today that QE3 for the time being is off the agenda. And the Dollar Index currently up just a touch at 74.5. That's still a long way off last week's peak of 76; Sterling plumbing an eight-month low against a basket of currencies. The Bank of England minutes from the June meeting showed signs the growth outlook had weakened, and some believe more stimulus may be needed. There was a 7-2 vote to keep rates on hold. German bunds rally while Portuguese and Irish bonds fall after the Greek government vote its vote of confidence as expected, but with debt restructuring seen by some as inevitable, safe haven bonds are well supported. Meanwhile, G20 agricultural ministers are meeting in Paris to tackle volatile food prices. Measures being discussed include a proposal by France to tighten commodity market regulation, the creation of food aid reserves and the removal of export restrictions for humanitarian supplies. Reuters Camila Reed has been following the talks closely and joins us now from our Paris Bureau. So Camila, what are the main sticking points? Hi, Chloe. Well, the main sticking point is really regulation. There are a number of countries like Brazil and Argentina who really oppose to the detailed suggestions made by France like position limits. I just came from speaking to the UK Secretary of State who said to me that actually she doesn't even think that speculation is what's been driving commodity prices higher, and actually she thinks that the finance ministers are best looking at overall commodity market regulation. Now, transparency, that's another issue that they'll be wrangling over the stock levels and also biofuel, so we may well see quite a watered-down version of the initial communique. Okay. And what are they likely to agree on and when can we expect a decision, Camila? Well, we'll have a decision tomorrow sometime around lunchtime. They're all settling down to dinner very shortly, a working dinner this evening to thrash things out. What they do all agree on is raising agricultural production. All the governments agree that there's a massive shortfall; that supplies are very tight, that things like rising population, climate change impacting on farming, and that money needs to be invested here. Also, things like a database on farm supplies; that looks like it could get the thumbs up. We did have a sneak preview of the draft communique and so there's a research program on wheat also on the agenda, and a rapid response to get food to areas in food crises. Great, thank you Camila. So, on the agenda tomorrow we'll be getting market manufacturing Flash PMI data for June from Germany and the whole of the Eurozone, that's at 8:28 and 8:58 British Summer Time respectively. Then at 1330 British Summer Time we'll get the latest reading on the US labor market. New jobless claims are expected to rise to 415,000 in the week ending June 18, up by 1,000 from the previous week. Plus, the two-day European Council Meeting kicks off tomorrow; economic issues are expected to top that agenda. European leaders are also expected to discuss the future of the European Stability Mechanism, and nominate Mr. Mario Draghi as the future president of the ECB.