BoE’s Carny press conference was the key event today as the governor mentioned possible monetary policy stimulus over the summer. He said that economic outlook had worsen and MPC would make initial assessment at July 14th meeting and make a decision at August meeting. Uncomfortable truth that the BOE cannot fully offset a large economic shock from leaving the EU. He also underscored that too low interest rate could deteriorate banks profitability so it may suggest that extra QE is more likely than a rate cut.
The Carney’s speech sent GBP tumbling. The GBPUSD (-1.03%) lost almost 2 figures and it’s traded at 1.3289. Moreover, the press conference helped equity markets go higher. UK100 ( 2.27%) has already recouped its post-Brexit losses and US500 ( 1.17%) is close to levels before the referendum.
As far as commodities are concerned, oil WTI lost 2.85% while Brent benchmark was traded 1.84% lower. At the end of the US session gold prices ( 0.24%) managed to inch higher somewhat and is traded just above 1320 USD per ounce.
Today’s jobless claims can definitely be counted as the good indicators of the US labour market and the numbers for last week confirm this. Claims went up by 10k vs. the previous reading but the trend pointing downwards is still there. In some weeks there could even be a new try to set a record of how low the numbers can get. Such low initial jobless claims suit the very high readings of JOLTs - the vacancies that the enterprises are trying to fill right now.
We had some interesting data overnight and both AUD and NZD trade moderately lower. Firstly, ANZ Business Confidence for June came at 20.2 (previously at 11.3). ANZ remarked that today’s results may be flagging a potential acceleration in economic growth. Activity outlook came at 35.1 (previously 30.4), business confidence came at 20.2 (previously 11.3) and it’s the highest level since the end of 2015. ANZ also reported that expectations for inflation a year ahead are higher, to 1.49% (from 1.39%).
The release of wages data regarding the non-manual workers in Sweden covering the month of April delivered a big negative surprise. The wage growth collapsed to only 1.1% YoY from 1.8% for March after it stayed around 2.5% between 2-4Q 2015. Since December (2.7% YoY) the indicator moves only lower. It has pushed SEK lower which has lost so far 0.17%.
It’s going to be very interesting night. We will have there PIMs from China, Japan and Australia. Moreover, there are scheduled CPI readings from Japan’s economy.
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