Информационно-аналитический отдел TeleTrade

• Monetary Conditions Still Highly Accommodating

• Higher Rates Needed to Bring Inflation Back to Target

• World Cup Likely Boosting Consumer Spirits

• Consumer Spending Bouncing Back After Weak 1Q

In the week ending June 23, the advance figure for seasonally adjusted initial claims was 227,000, an increase of 9,000 from the previous week's unrevised level of 218,000. The 4-week moving average was 222,000, an increase of 1,000 from the previous week's unrevised average of 221,000. The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending June 16, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending June 16 was 1,705,000, a decrease of 21,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 1,723,000 to 1,726,000. The 4-week moving average was 1,719,500, a decrease of 3,750 from the previous week's revised average. This is the lowest level for this average since December 8, 1973 when it was 1,715,500. The previous week's average was revised up by 750 from 1,722,500 to 1,723,250.

Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the first quarter of 2018, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.9 percent.

Real gross domestic income (GDI) increased 3.6 percent in the first quarter, compared with an increase of 1.0 percent in the fourth quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.8 percent in the first quarter, compared with an increase of 2.0 percent in the fourth quarter.

The price index for gross domestic purchases increased 2.7 percent in the first quarter, compared with an increase of 2.5 percent in the fourth quarter. The PCE price index increased 2.5 percent,ncompared with an increase of 2.7 percent. Excluding food and energy prices, the PCE price index increased 2.3 percent, compared with an increase of 1.9 percent

The inflation rate in Germany as measured by the consumer price index is expected to be 2.1% in June 2018. Based on the results available so far, the Federal Statistical Office (Destatis) also reports that consumer prices are expected to increase by 0.1% compared with May 2018.

In June 2018, the harmonised index of consumer prices for Germany, which is calculated for European purposes, is expected to rise 2.1% year on year and 0.1% on May 2018.

In June, the Economic Sentiment Indicator (ESI) remained virtually unchanged in the euro area for the third consecutive month, registering a marginal decrease of 0.2 points (to 112.3).

In the EU the indicator edged down by 0.6 points (to 112.2). In a quarterly perspective, developments were similarly flat, with both indicators booking a minor decrease of 0.5 points since March.

• Growth in domestic manufacturing output had edged up; growth in export output had eased slightly but remained robust

In June 2018, according to preliminary estimates, the Italian consumer price index for the whole nation (NIC) increased by 0.3% on monthly basis and by 1.4% compared with June 2017 (+1.0% in May 2018).

The acceleration of the growth on annual basis of All items index was mainly due to prices of Non-regulated energy products (from +5.3% to +9.4%), of both Processed and Unprocessed food (respectively from +1.7% to 2.4% and from +2.4% in May to +3.4%) and to prices of Services related to transport (from +1.7% to +2.9%).

Inflation excluding energy and unprocessed food (core inflation) was +0.9% and inflation excluding energy was +1.2% (both accelerated from +0.8% in May).

• Inflation expected to pick up towards the end of the year, then to increase gradually

• Balance of risks for global activity has worsened

• Risks skewed towards the downside in the medium-term

According to the flash estimate issued by the INE, the annual inflation of the CPI in June 2018 was 2.3%. This indicator provides a preview of the CPI that, if confirmed, would imply an increase of two tenths in the annual rate, since in May this change was 2.1%. This behavior highlights the increase in the prices of fuels (diesel and gasoline/petrol), compared to the decrease experienced in 2017.

According to the flash estimate of the CPI, consumer prices registered a variation of 0.3% in June, as compared with May.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1734 (1492)

$1.1681 (1038)

$1.1652 (130)

Price at time of writing this review: $1.1534

Support levels (open interest**, contracts):

$1.1476 (3580)

$1.1434 (2258)

$1.1389 (2016)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 9 is 101302 contracts (according to data from June, 27) with the maximum number of contracts with strike price $1,1550 (4968);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3285 (343)

$1.3255 (172)

$1.3213 (252)

Price at time of writing this review: $1.3077

Support levels (open interest**, contracts):

$1.3025 (962)

$1.2984 (1358)

$1.2930 (1006)

Comments:

- Overall open interest on the CALL options with the expiration date July, 9 is 23627 contracts, with the maximum number of contracts with strike price $1,3650 (2457);

- Overall open interest on the PUT options with the expiration date July, 9 is 30352 contracts, with the maximum number of contracts with strike price $1,3250 (2606);

- The ratio of PUT/CALL was 1.28 versus 1.28 from the previous trading day according to data from June, 27.

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

Statement by Reserve Bank Governor Adrian Orr:

"The Official Cash Rate (OCR) will remain at 1.75 percent for now. However, we are well positioned to manage change in either direction - up or down - as necessary.

Our outlook for the New Zealand economy, as detailed in the May Monetary Policy Statement, remains intact. Employment is around its sustainable level and consumer price inflation remains below the 2 percent mid-point of our target, necessitating continued supportive monetary policy for some time to come.

Global economic growth is expected to support demand for our products and services. Global inflationary pressure is also expected to be higher but remain modest. This outlook has been tempered slightly by trade tensions in some major economies. Ongoing volatility in some emerging market economies continues.

Domestically, ongoing spending and investment, by both households and government, is expected to support growth. However, the recent weaker GDP outturn implies marginally more spare capacity in the economy than we anticipated. The Government's projected spending impulse is also slightly lower and later than anticipated.

CPI inflation is likely to increase in the near term due to higher fuel prices. Beyond that, inflation is expected

to gradually rise to our 2 percent annual target, resulting from capacity pressures.

The best contribution we can make to maximising sustainable employment, and maintaining low and stable inflation, is to ensure the OCR is at an expansionary level for a considerable period".

• Says Economy Is Growing Slightly Faster Than Expected, Creating New Risks for Policy Makers

• Signals Support for Two More Rate Increases This Year

• Costs of High Unemployment Largely Borne by Minority Groups, People With Less Education, Children

• Fed Should Raise Banks' Capital Buffer, Now at Zero

• Misinterpretation of Neutral Rate 'A Distinct Possibility'

• Don't Need To Raise Rates Preemptively

The trade conflict between the EU and the USA is intensifying and leaves a clear mark on the consumer mood in Germany in June. Economic optimism clearly declines, while both income expectations and propensity to buy manage to hold their ground with slight upward growth. GfK forecasts that the level will remain unchanged in July in comparison to the previous month at 10.7 points.

The route taken by the US President in terms of the trade policy towards the EU is causing concern, especially where economic expectations are concerned. These suffered clear losses. In contrast, the income expectations and propensity to buy are managing to hold up, even making slight gains in June. The consumer climate remains stable as a result.

Following the stable development in the previous month, economic expectations saw a notable decline in June. The indicator dropped 14.1 points to 23.3 points. The last time it showed such a low value was over a year ago, in March 2017, when it stood at 18.1 points. This represents a drop of 18 points compared with last year.