In the accounts of July monetary policy meeting, ECB noted that “members considered that the risks surrounding the euro area growth outlook could still be assessed as broadly balanced”. Though, there are uncertainties related to global factors “notably the threat of protectionism.”. Also, “risk of persistent heightened financial market volatility also continued to warrant monitoring.”
On inflation, there was “broad agreement” on chief economist Peter Praet’s assessment. Annual HICP inflation rose to 2.0% in June. And, “on the basis of current futures prices for oil, annual rates of headline inflation were likely to hover around the current level for the remainder of the year”. Muted underlying inflation “had been increasing from earlier lows”. Also, there was “increasing support” for domestic cost pressures from “ongoing strengthening in wage growth”. Beside, “members broadly shared the view that uncertainties surrounding the inflation outlook had been receding.”
Regarding communications, “members widely expressed satisfaction that the communication of the June monetary policy decisions had been well understood by financial markets.” And, the “enhanced forward guidance on the future path of policy rates had been effective in aligning market views”. That is, ECB interest rates would remain at current levels “at least through the summer of 2019”. It “struck an appropriate balance” between precision and flexibility and “was remarked that the Governing Council’s expectation was probabilistic in nature.”
Into US session: Dollar firm but lost momentum, Trump threatens American of market crash
Entering into US session, Dollar remains the strongest one for today, together with Swiss Franc. However, recovery in the greenback seems to be losing some momentum. For now, EUR/USD and GBP/USD are holding well above 1.1493 and 1.2811 minor support respectively. Thus, there is no indication of completion in Dollar’s pull back yet.
Dollar’s upside momentum is apparently limited as Trump threatens the Americans that if he’s impeached, “the market would crash” and “everybody would be very poor”. So, Trumps is telling the world that Americans would choose to keep a criminal as President so as to save their pockets?
It was a pretty eventful session in Eurozone with PMIs, ECB accounts and comments from Bundesbank head Jens Weidmann. Euro is doing ell enough to trade as the third strongest one. Sterling also shrugs off the collection of documents on preparation for no-deal Brexit, published by the government.
On the other hand, Australian Dollar remains the weakest one for today on its down domestic political turmoil. The country could be having a new Prime Minister, the seventh in a decade, within days. And it’s uncertain whether Malcolm Turnbull will stay. Or it will be Treasurer Scott Morrison, former Home Affairs Minister Peter Dutton, or Foreign Affairs Minister Julie Bishop.
The European stock markets are pretty quiet too, with FTSE, DAX and CAC trading nearly flat in very tight range. China’s Shanghai SSE rose 0.37% to close at 2724.62 as new rounds of tariffs from US and China takes effect. Hong Kong HSI dropped -0.49%. Nikkei rose 0.22% and Singapore Strait Times rose 1.56%.