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Betting markets start to favour Biden again

  
  Analysis
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The shift in Wisconsin is changing the narrative

Smarkets have now pared Trump’s odds of winning to even i.e. 50%, after having it around 71% from about an hour ago. Elsewhere, Betfair is now seeing odds of a Biden win at 8/11 after having Trump as favourite at 2/5 earlier.

Meanwhile, the market is still keeping more choppy with European stocks having pared opening losses earlier to post modest gains, only to give that all away again now.
S&P 500 futures are still up by 0.3% for the time being but risk appetite is fragile.

Update (1032 GMT): Smarkets now give Biden a 55% chance of winning.

Economic data coming up in the European session

  
  Analysis
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US equities snapped back to losses yesterday, though they finished off the lows at least. Futures are keeping mildly higher today but the overall mood remains more tepid as we start to move towards European morning trade.

The dollar is a touch softer but nothing significant, as major currencies are still keeping in rather narrow ranges for the most part today.
It is still going to be all about risk sentiment ahead of the weekend, so expect virus headlines to dominate once again to see if we can get more meaningful price action rather than the choppy back and forth we have been seeing since last week.
0900 GMT – Eurozone May construction output data
Prior release can be found here. Construction activity is expected to bounce back after bottoming out in April, but overall conditions should remain highly subdued still.
0900 GMT – Eurozone June final CPI figures
The preliminary report can be found here. As this is the final release, it shouldn’t have much – if any – impact to markets.
Also, at 0800 GMT we will be getting the latest ECB survey of professional of forecasters but it isn’t really much of a notable release.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

Bank of Canada holds rates at 0.25%, as expected

  
  Analysis
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Highlights of the Bank of Canada rate decision

  • Prior was 0.25% (this is the effective lower bound for Canada)
  • BOC pledges to keep rates at 0.25% until inflation target hit
  • BOC to continue $5B per week in QE; repeats buying will continue “until the recovery is well underway”
  • BOC stands ready to adjust its programs if market conditions warrant
  • Says economic decline “considerably less severe than the worst scenarios presented in the April MPR”
  • BOC sees 40% of activity recovered in Q3 but then “the Bank expects the economy’s recuperation to slow as the pandemic continues to affect confidence and consumer behaviour and as the economy works through structural challenges”
  • Central scenario in in MPR shows economy not likely to return to pre-COVID levels until 2022
  • Sees 2020 GDP down 7.8%, up 5.1% in 2021 and up 3.7% in 2022
  • Says Q2 activity estimated to have fallen about 15% below its level at the end of 2019, economy appears to have bottomed in April
  • Sees US GDP down 8.1% in 2020, up 3.4% in 2021 and up 4.3% in 2022
  • Global GDP forecast down 5.2% in 2020 and up 5.2% in 2021
  • The path for CPI in the next year largely reflects the influence of energy prices
The big news here is this line:
“The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved.”
That’s forward guidance indicating no hikes until 2% inflation is ‘substantially achieved’. That last phrase leaves them some wiggle room but this is conditional forward guidance.
Macklem will hold a briefing at 1500 GMT (11 am ET)
Forecasts in the MPR:
BOC forecasts for developed world
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