Loonie Increased, North Korean Threat Wasn’t Appreciated

Market Reviews

The greenback has risen but the impulse is feeble. Loonie has significantly improved due to lifted oil prices and the fact that BoC started considering raising rates. Japanese yen remained soft and the threat about ballistic missile sent by North Korea didn’t boost it. The Unites States and South Korea together showed their capability to reject the attack. Kim Jong-un claimed that the launch was a present in honor of the 4 July holiday. This weekend, Janet Yellen got into a hospital, but now she is fine and ready to resume the work.

Stephen Poloz (Bank of Canada Governor) stated that inflation is weak but stressed that Bank of Canada should also rely on other indicators and start considering some policy tightening. He added that decline of oil price isn’t a big deal. Currently, investors are pricing in more than 50% odds of a rate lift by 25 basis points from BoC at its meeting July 12. Meanwhile, some members of BoE said there should be a rate hike. Particularly, Michael Saunders noted that households condition requires higher rates. Ian McCafferty also claimed that in order to settle monetary policy, Bank should raise rates.

Peter Praet (ECB chief economist and Executive Board member) said that it will take some time for inflation to reach the target, that’s why, stimulus exit shouldn’t be so immediate as everybody would want it to. Ewald Nowotny (ECB Governing Council member) acknowledged that the economy is recovering, and such spheres as investment and exports improved. He affirmed that monetary policy should be changed. Yves Mersch (Governing Council member) promised that ECB will think and decide on exiting an ultra-easy monetary policy.

British BRC shop prices fell -0.3% yoy in prior month. China Caixin PMI services declined to 51.6. Today, Britain will release PMI services, Eurozone will announce PMI services final and retail sales. The United States will show factory orders and FOMC protocol.