MNI US Open: Canadian Dollar Rises Ahead Of BoC Decision

EXECUTIVE SUMMARY:

• BANK OF CANADA TAPER SEEN ON COURSE AS GROWTH WOBBLES (MNI STATE OF PLAY)
• U.K. PUSHES FOR FINANCE EXEMPTION FROM GLOBAL TAX DEAL
• E.U. PARLIAMENT APPROVES VACCINE PASSPORTS, EASING TRAVEL
• "GANGBUSTERS" U.K. ECONOMY MAY NEED LESS B.O.E. SUPPORT: HALDANE
• E.C.B. TO REAFFIRM BOND BUYING VIEW (MNI STATE OF PLAY)

Fig.1: Greek Supply Turns Spread Wider Vs Italy Again

Source: BBG, MNI

NEWS:

BANK OF CANADA (MNI STATE OF PLAY): The Bank of Canada on Wednesday may signal it remains on a path to the further tapering that some investors expect in the third quarter, holding its rate and asset purchase settings for now as it juggles a short-term growth slowdown and faster inflation. For full article contact sales@marketnews.com

U.K./G7/GLOBAL TAXES (BBG): U.K. Chancellor of the Exchequer Rishi Sunak is pressing for the City of London to be exempt from a plan by global leaders to make multinationals pay more tax to the countries they operate in. Finance ministers from the Group of Seven advanced economies struck a historic deal last weekend that could force the world's biggest companies to pay a minimum corporate tax rate of 15%. Sunak is expected to make the case that financial services, including global banks with head offices in London, should be exempt from the plan when talks move to the G-20 next month.

U.K.-E.U. (BBG): Officials from Britain and the European Union are meeting on Wednesday to try and defuse a row over Northern Ireland that threatens to spill over into this week's Group of Seven summit.European Commission Vice President Maros Sefcovic is holding talks with the U.K.'s Brexit minister, David Frost, in an effort to resolve the trade dispute -- part of which now revolves around whether British will be allowed to ship sausages to Northern Ireland. Frost will then head to Cornwall, England, to support Prime Minister Boris Johnson, who is set to come under pressure from U.S. President Joe Biden and EU leaders.

UK-EU: A meeting between the UK Cabinet Office minister Lord Frost and VP of the European Commission for Interinstitutional Relations Maros Sefcovic is underway in London, with the intention of de-escalating the heightened tensions surrounding the implementation of the Northern Ireland protocol in the Brexit Withdrawal Agreement. The latest spike in tensions comes as the UK gov't noted that it would likely unilaterally extend the customs check grace period on imports of chilled meat products from GB to NI, for which the EU has threatened to retaliate.

UK-EU: James Crisp of The Daily Telegraph tweets: "Have got some strong pushback from EU sources to Politico story that EU diplomats mulling emergency plan to introduce border checks between Ireland and rest of EU if London and Brussels talks over Northern Ireland Protocol ultimately fail." "Unity above all. Ireland will not be dropped," said one EU diplomat. "Completely nuts," said another. An EU officials said, "Pure unadulterated bollocks". Feeling around Brussels that the story could be a kite flying exercise or a warning shot from tough member state to Ireland not to push too hard for flexibilities on Single Market rules in Northern Ireland. Interesting that this is poss more about intra EU politics than UK-EU."E.U. (BBG): The European Parliament approved the introduction of mutually recognizable certificates that will allow quarantine-free travel within the bloc.As a final step, the certificates need to be approved by the EU governments. They should be operating across all 27 EU member states by July 1 and will offer proof their holders have been inoculated against the coronavirus, have recovered from the illness or have a recent negative test

B.O.E.(BBG): The U.K. economy is "going gangbusters" at the moment and the Bank of England may need to consider turning off the monetary stimulus tap to keep inflation in check, according to Chief Economist Andy Haldane. The pound rose.Haldane, who is leaving the role this month, said it was "hard to find anything whose price isn't going up at the moment" and it was important to stop any temporary blip in inflation from becoming embedded.

E.C.B. (MNI STATE OF PLAY): With an economic rebound and rising inflation emboldening hawks, the European Central Bank could reaffirm its intention to buy bonds at a pace necessary to maintain easy financing conditions after its meeting on Thursday, but steer shy of promising to maintain its current EUR80 billion a month throughout the summer. For full article contact sales@marketnews.com

RIKSBANK (BBG): Swedish inflation "is moving upwards over time" after recent "large swings," Riksbank Governor Stefan Ingves says at a webinar. July CPIF "will be 0.8% if we are right". It's "reasonable to believe inflation will move towards 2% after that".

AIRLINES / COVID (BBG): British Airways and Ryanair Holdings Plc face an investigation into whether they broke U.K. consumer rules by failing to offer refunds to customers for flights they couldn't take.The U.K.'s Competition and Markets Authority said it has opened enforcement cases against both airlines on Wednesday. The watchdog last year opened a probe into the airline sector, following concerns that during the Covid-19 pandemic, customers were denied refunds while unable to fly and instead were offered vouchers or the option to rebook flights.

DATA:

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