- Trichet Signals One Rate Increase May Be Enough.
- U.S. payrolls fall by 62,000 last month.
Good Morning. Whilst our colonial cousins are gearing themselves up for their barbeques, carnivals, picnics, baseball games and fireworks to celebrate Independence Day we find ourselves with time to mull over yesterdays major events.
Just when you thought there was room for further appreciation of the Euro following the 25bp rate increase to 4.25%, the currency disappointed after ECB President Trichet signalled that there may be no further need to increase rates again. His ‘no bias’ or ‘pre-commitment’ to further raise rates has frustrated the market expectations and would appear that they are ‘done for now’. Does this now mean we have seen the high in the €/$, probably not with oil continuing its march towards $150 a barrel and yet another new high recorded of $145?
With the U.S. Non Farm payrolls coming in on track, but the US$ gaining from a weaker €, Sterling had to give way but managed to contain its decline at 1.9800.
Elsewhere the Australian dollar gained ground and the New Zealand dollar ended recent losses as speculation mounts that the Federal Reserve will delay raising interest rates, which will help maintain the yield advantage they both have over the U.S.
With no data from the States, we will be able to focus on the Halifax HPI as soon as we are at our desks. No guessing which way we would expect this to come in. The German Factory Orders data will give us something to focus on in the morning with a possible reading of +0.8%. The afternoon’s only focus will be the Canadian Ivey Purchasing Manager’s Index with a forecast of 62.0.
Unfortunately we don’t expect much excitement today and with no one left to cheer at Wimbledon the Pimms will be a little flat.
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