Derek Halpenny, European Head of GMR at MUFG, suggests that with global equity markets now above levels that immediately preceded the UK Brexit vote there is a much greater chance that financial market focus will shift back to incoming economic data to gauge the next actions to be taken by key central banks.
“The ECB meets on 21st July and we expect more of what we’ve had at recent meetings – continued dovishness but a message that monetary easing actions have already been taken and that the ECB will take some time to assess the impact of those easing actions. The Brexit fallout and in particular the weakness of banking sector shares will ensure that the general tone from President Draghi is downbeat, leaving the markets speculating that further easing later this year is probable. Data-wise it is from the US where attention will be most pronounced with Retail Sales and CPI released tomorrow.
The Beige Book report for the FOMC meeting on 26th-27th July indicated continued modest growth with a continued gradual tightening of the labour market – conditions that would warrant at least one rate hike this year given the receding global financial market risks. Our suspicion is that US short-term yields may drift higher in the week ahead, pointing to a slight bearish bias.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.