The European currency made peace with the US dollar for several days, maintaining relative equilibrium around 1.14. Other major rivals suspended their struggle amid a levelling yield curve in the German and US bond markets. Optimistic talks about global growth momentum caused investors to dampen low-yield bonds, while the release of a weak NFP report and the Fed Minutes managed to partially reverse the trend.

The minutes of ECB’s June policy meeting also turned out to be rather ambiguous. The forecast for core inflation was downgraded to 1.4% for 2018, with the economy seeing stuck to the line of pickup, as the report suggested. Wages responded quite badly, due to the structural features of the labour market of the eurozone. The Phillips curve, suggesting an inverse relationship between inflation and unemployment, was practically flattened, indicating a very weak connection of wages with a jobless rate.

However, if the reflationary forces mentioned by Mario Draghi are only gaining momentum in the euro area, investors in the United States have already lost faith in them. The large-scale reforms that were part of Trump’s election campaign have not yet been implemented and investors are beginning to lose patience, preparing for market correction. And if the dollar has already demonstrated this disappointment, then flattening indices curve may prove to be a first sign of bearish consolidation.

The industrial DOW index shows signs of attempts to establish a downward pressure, which have been successfully eliminated so far.  Bulls may be ready to withdraw from their US indices bets, causing massive drop and a move towards European assets waiting for the Fed Chairman Janet Yellen speech. On her speech on Wednesday and Thursday, she will probably try to support the US currency by saying that the regulator will soon need to start reducing the balance sheet and that the economy needs at least one more rate hike. However, weak wage growth, as follows from the recent NFP report, will probably make her statements less hawkish.

Among other positive moments, a rising volume of consumer lending was registered in the US economy.  In May, US borrowers received $18 billion in loans, $5 billion more than forecasts, indirectly indicating a possible increase in consumption and high economic confidence.

The oil market stroke by negative news on demand outlook. Consumer inflation in China slowed to 1.5%, with a forecast of 1.6%, indicating a weakening of economic growth. Mortgage loans declined in Australia to 1%, which plays in favour of keeping the RBA low interest rates, indicating some cooling of the real estate market.

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