Today’s session on European bourses, due to the Independence Day in the United States, ran in a very calm mood. The day began with the series of disappointments on the part of central banks. At first the Reserve Bank of Australia ket interest rates unchanged and issued a surprisingly dovish testimony. Then Swedish Riksbank dispelled any hopes for higher interest rates with surprisingly dovish statement.
The RBA was rumoured to consider interest rate increases even back in 2016 when European banks were in a midst of unprecedented easing. So now, when banks like the ECB and BoE sharpen their rhetoric and signal future rate increases some traders saw the Australian central bank becoming a bit more constructive as well. But that has not materialized – the RBA stayed the course and dragged AUD rate significantly down.
Riksbank is one of the most aggressive central bank with the repo rate at -0.5% higher than just in case of the SNB. Heading into today’s meeting there were expectations that perhaps this could change as the data improved remarkably. However, this has not been the case for Riskbank. A fresh set of economic forecasts is clearly disappointing. The most watched parameter – repo rate forecast, has been left unchanged and the Bank keeps ruling out interest rate hike until the second half of 2018.
Goldman Sachs analysts doubt in any shifts in the ECB’s monetary policy this year. They interpret Draghi’s comments in the context of their own forecast (of low domestic inflationary pressures and no further acceleration in economic activity). On their economic base case, Draghi’s comments do not suggest a need for a hawkish shift in policy.
Today’ we had a Canadian PMI data which pushed CAD higher as data came in at 54.7 while the previous release was 55.1. Either way, it’s the 16th consecutive month of expansion as the gauge maintains above a 50 level which divides contraction from economic expansion. Cutting to the chase, a new orders subindex declines to 55.1 from 55.7 being the lowest since January 2017. Moreover, an employment subindex proved to be the lowest since March this year.
Litecoin and Bitcoin gain on signs of increased acceptance as South Korea is reportedly preparing to regulate and legalize Bitcoin. Although, a recent rally seen in Bitcoin has been really astounding, Goldman Sachs claims that it’s a matter of time when Bitcoin’s value achieves $4000. Beside them, experts believe that the ongoing price surge is caused by a huge demand in countries such as Japan, India and Venezuela.