The first of the month is key for markets as we get manufacturing data from around the world that gives us an insight into the health of the global economy.
But Robert Savage at FX Concepts says there were three news stories this weekend that were more important than the PMI reports.
- 'The EU-NSA row' — An NSA document showed that the EU embassy in Washington was bugged and that similar measures were taken at the European mission in New York. Savage points to a Der Spiegel report on relations between the U.S. and the EU especially in terms of free trade. From Savage: "'Partners do not spy on each other,' EU Justice Commissioner Viviane Reding said at a public forum in Luxembourg. 'We cannot negotiate over a big trans-Atlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators.'"
- The protests in Egypt — "So far the protests in Egypt are as expected - big, noisy - but of little consequence," said Savage. "The risk for markets is civil war and an extension of the Syrian conflict fears as the government supported by Islamists fight a large group of moderate Egyptians."
- Mark Carney taking on the role of Bank of England Governor – "Like the U.S., the UK is closer to ending the easy money of QE than extend it. But the uncertainty of timing and size in drawing down extraordinary policy makes the meeting on July 4th more important than usual." Carney had previously indicated that he would be willing to make changes to the benchmarks and targets that the BoE uses to guide monetary policy, and some analysts think QE could be extended since three members of the monetary policy committee have previously voted for expanding the asset purchase programme.
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