The Canadian dollar traded in a narrow range of roughly immediately after the publication of statements of the Bank of Canada's monetary policy on Wednesday, and then declined slightly. The Bank of Canada left its key interest rate a day at 0.75%, and noted that his predictions about the prospects for the Canadian economy coincide with the forecasts in the latest report, published in April.
"While the weakness in the US in Q1 increased concern about the basic forces of the economy, is expected to return to sustainable growth in the 2nd quarter," noted the Bank of Canada. "The Canadian dollar has strengthened in recent weeks amid rising oil prices and a weakening US dollar", - the central bank. "If these factors persist, their effects need to be studied, as in the following months will be published more data."
Statement by the central bank, mainly coincided with market expectations, so almost no impact, despite uneven trading immediately after its publication. According to analysts, after the publication of statements of the Bank of Canada, the US dollar is likely to continue its quite sharp recovery observed in the past few sessions. In a statement, the Bank of Canada said that, if the power of the Canadian dollar continues, the total effect on the financial conditions may lead to the fact that the central bank will revise the amount of stimulus necessary economy.
The yen continued to fall in price against the dollar, reaching a minimum in this July 9, 2007, due to the publication of the report, the representative of the Cabinet. It was reported that the Government of Japan for the first time in 10 months increased its estimate of consumer spending, but the overall outlook for the economy remained unchanged. In addition, the government lowered the estimate of exports and production. The report also said that growth in consumer spending is gaining momentum, which is a more upbeat assessment from the previous statement that the overall pace of growth is assured. Growth stocks and wages, as well as cheaper oil had a positive effect on consumer sentiment, which in turn has supported consumer spending. Also, the Cabinet of Ministers said that the economy continues to recover at a moderate pace.
Meanwhile, experts note that comments Chief Cabinet Secretary of Japan Sugi eased investors' concerns about the possibility of verbal intervention by the US government and Japan. Suga earlier on Wednesday again said that he did not consider the current rapid currency fluctuations. However, some point out that began on Tuesday a stronger dollar against the yen is not accompanied by an increase in the yield of US Treasury bonds, which is difficult to explain.
Euro regained lost ground after Greece and creditors have begun the technical negotiations aimed at reaching an agreement, as reported by Bloomberg and Reuters, citing a source in the Greek government. According to him, the proposed agreement includes the reform of VAT, but avoids the "recessionary measures." The agreement will be referred to reduction in target levels of primary surplus, long-term solutions for a long time and change, but not cutting, the pension system in Greece. The source said the remaining differences between the IMF and the EU. "If it was not required to reach an agreement with the IMF, the question would have been resolved."
Previously, support for the euro has statistics on Germany. According to figures released today by the research group GfK, consumer sentiment in Germany in June are expected to grow again. At the same time, GfK warned that geopolitical risks may put pressure on future consumer spending. Leading consumer confidence index GfK in June should rise to 10.2 from 10.1 in May. "The report on consumer confidence in Germany was better than expected, which should positively impact on domestic consumption in the coming months.