IMF tells the Fed what to do

IMF head Christine Lagarde might find her presence in Washington less than welcome following her decision today to tell Fed Chair Janet Yellen what to do with her interest rate decisions.

London city
Source: Bloomberg

Osborne to sell off remaining shares in Royal Mail
The tedium of a Greek-dominated headline remains with us, as the tragedies of the final acts are played out in front of an increasingly bored audience. Syriza continues to sail too close to the wind for its own good, and judging by the way EUR/USD has traded today currency traders speculate that the party will not know when it has crossed that line.

The UK tax payer’s exposure to the Royal Mail is once again in focus. Chancellor George Osborne has confirmed that he will begin the process of selling off the remaining 30% stake in the business which should hopefully raise a further £1.5 billion to tackle the country’s budget deficit. The timing of this announcement is no surprise as the  summer budget is now just over a month away, pencilled in for the 8th of July. With bond yields belatedly trying to look a little more attractive, we have seen equity markets sell off around Europe.

Janet Yellen rattled by IMF
As if traders didn’t have enough to digest with the plethora of data already released this week and the looming Friday non-farm payrolls figures, the IMF has decided to stir things up. Christine Lagarde, the head of the IMF, has decided to give the Fed some free advice.

She has stated that the Fed should wait until the first half of 2016 before increasing interest rates. Janet Yellen has done her best to avoid any sudden movements that might startle the markets, and you would have to imagine that the IMF’s comments will not have been received warmly.

Commodities continue to produce a mixed bag
Oil traders will be conscious that the next 24-hours will see the start of OPEC’s latest Vienna jolly. All the attention will be focused on the Saudi oil minister to see if his actions match the conviction of his words from earlier in the year.

The last month has seen both crude and US light oil prices ease back from their year-highs, and tomorrow’s meeting certainly has the ability to increase the pace of this move lower. Once again, gold’s lustre looks a little tarnished as it has drifted in intraday trading, back below the $1180 level and is showing all the signs of wanting to retest its year lows back down around $1140.

Euro rally has stalled
With the complexities of all the Greek debt negotiations and the destabilising IMF comments, the last couple of days’ charge higher in EUR/USD has stalled. No doubt tomorrow’s non-farm payrolls figures will inject a little adrenaline into the trade before we hit the weekend.

If Lord Ashdown had been looking for a safer hat-eating wager, today’s Bank of England interest rate decision would have offered him the ideal opportunity. As the eurozone – the UK’s largest trading partner – continues to battle its own demons, the voting members of the MPC have found their hands somewhat tied and today’s decision will have surprised no-one. 

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