Any efforts to support the euro via policy or even verbal interventions are unlikely, according to a report citing three ECB sources.
The falling currency is making it tough for the ECB to get inflation under control and today’s +7.9% German CPI report highlights just how far off base they are. But three ‘ECB insiders’ cited by Econostream Media say the currency won’t be a lever, even if the euro falls below parity.
The euro is up 25 pips to 1.0752 but has weakened a quarter-cent in the last half hour.
It’s a bit of a mess after EU leaders once again failed to agree on a Russia oil embargo.
That said, they are expected to announce an agreement to what the next round of sanctions will include and a Russia oil embargo will be part of that. A Reuters source, citing the latest draft conclusions, said that:
“The European Council agrees that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia into Member States, with a temporary exception for crude oil delivered by pipeline.”
Adding that countries would “address the issue of the temporary exception for crude oil delivered by pipeline as soon as possible”. The details and the nooks and crannies will have to be ironed out before a final agreement is announced.
The move here is mainly to try and spare deliveries through key pipelines in order to get Hungary on board. Of note, the Druzhba pipeline will be allowed to run and it is one that flows through Hungary, Slovakia, and the Czech Republic. For some added context, roughly 75% of Russian oil to Europe is delivered by tankers, so an embargo on all else but pipelines will still have a significant impact.
TUE: NBH Announcement; Japanese Jobs Report (Apr); Chinese PMIs; German Unemployment (May); EZ Flash CPI (May); Canadian GDP.
WED: BoC Rate Decision; South Korean Trade Balance (May); Australian GDP (Q1); Chinese Caixin Manufacturing PMI Final (May); German Retail Sales (Apr); EZ/UK/US Manufacturing Final PMIs (May); EZ Unemployment Rate (Apr); US ADP National Employment (May); US ISM Manufacturing PMI (May); OPEC JTC Meeting.
THU: Swiss CPI (May); EZ PPI (May); US Durable Goods R (Apr); OPEC+ Meeting
FRI: South Korea CPI (May); EZ/UK/US Services and Composite Final PMIs (May); EZ Retail Sales (Apr); US Labor Market Report (May); ISM Services PMI (May).
NOTE: Previews are listed in day-order
European Council Special Meeting (Mon/Tue):
To finalise the sixth sanctions package against Russia, EU leaders are poised to meet on the 30th and 31st of May 2022. The focus will likely fall mainly on the oil embargo aspect of the package amid Hungary’s opposition to a swift and timely exit from Russian energy. Ukraine’s Energy Ministry warned that “something could happen with the Druzhba oil pipeline” delivering crude oil to Hungary if Hungary blocks the EU’s oil embargo, according to Euronews. Sources via Bloomberg and Reuters suggested the EU is leaning toward delaying a pipeline ban to achieve its oil deal embargo, where shipments via the Druzhba oil pipeline could be excluded temporarily from the proposed EU ban. Aside from energy, food security will also be on the agenda – “At our meeting, we will discuss concrete ways to help Ukraine export its agricultural produce using EU infrastructure”, Council President Michel said in his invitation letter. Defence will also be discussed within EU borders. The meeting is set to start at 15:00BST/10:00EDT, according to the invitation.
Us ISM Manufacturing PMI (Wed), Services PMI (Fri):(more…)
The Times has been told that the government’s “reasonable” worst-case scenario, which has been drawn up by officials from across Whitehall, says that there could be widespread gas shortages if Russia goes further in cutting off supplies to the EU.
A minister said the briefing suggested that electricity could have to be rationed for up to six million homes at the start of next year, mostly at peaks in the morning and evening. The curbs could last more than a month, causing energy prices to rise again and leaving GDP lower than forecast for years to come.
Britain’s three remaining coal-fired power stations are being asked to stay open for longer than planned.