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Market Review July 1, 2014

July 1, 2014

The miracle hasn’t happened: according to last data inflation in June in the Euro zone didn’t undergo any changes and was left on last month level at 0.5%, though 0.6& growth has been expected. Base inflation has increased up to 0.8%, so it is not supposed to affect prices change on energy and foodstuff.

Possibility of even bigger easing of regulators’ policy is not high. Still there was a new round of banks’ crediting as announced for 400 billion Euros on June meeting, and the key rate and deposit rate were downgraded; the latter one to the negative level.

It is worth mentioning an acceleration of the fall of crediting pace in the Euro zone. The figure had dropped by 2%, what has become 25th negative month in a row. But on Thursday we are going to hear from Draghi that undertaken measures demand some time in order to be reflected in statistics. Draghi might also refer to money mass increase (M3) by 1%.

At that if EU inflation remained at 0.5%, then in Italy it fell to 0.1%. That’s the difficulty of monetary policy of the ECB. If we have to assume that in general there are no risks of deflation in Europe, then in specific states they are quite real. The only effective tool of the ECB here is securities’ purchase of various EU states.

 

 TECHNICAL ANALYSIS

EUR/USD

The Euro has finally encountered resistance on the upside. The rate was very close to touch the level of 1.3700. But the boundary wasn’t breached, so we are likely to see the start of correction

USD/JPY

The pair still looks bearish in spite of some bounce, which can be seen on the chart. Support level around 101.25 has been relevant for months, so if it is crossed we might see a serious downgrading of the currency with potential goal of 100 in the long run.

 

GBP/USD

The pattern of the Pound is quite remarkable for its resemblance of the Euro. After a rally the asset has come across resistance. Though current picture of Pound rather suggest consolidation than correction.

 

 

 

ECONOMIC CALENDAR

 

All Day   Holiday Canada – Canada Day

All Day   Holiday Hong Kong – Hong Kong Special Administrative Region Establishment Day

01:00  CNY Chinese Manufacturing PMI  

01:45  CNY Chinese HSBC Manufacturing PMI

04:00  IDR Indonesia Core Inflation (YoY)

04:30  AUD Interest Rate Decision

04:30  AUD RBA Rate Statement          

07:13  EUR Spanish Manufacturing PMI    

07:30  CHF SVME PMI    

07:45  EUR Italian Manufacturing PMI    

07:50  EUR French Manufacturing PMI  

07:55  EUR German Manufacturing PMI    

07:55  EUR German Unemployment Change    

07:55  EUR German Unemployment Rate  

08:00  EUR Manufacturing PMI    

08:30  GBP Manufacturing PMI    

09:00  EUR Unemployment Rate  

12:00  USD Treasury Secretary Lew Speaks        

14:00  USD ISM Manufacturing Employment

14:00  USD ISM Manufacturing PMI