The Bank of England minutes for the month of June showed that the decision to keep interest rates at 0.5 percent was not unanimous as policy maker Andrew Sentance said it is appropriate to “gradually withdraw” BOE stimulus measures amid inflation risks. This is the first time in seven months that the decision was not unanimous.
Biggest % losers: EUR/JPY down 0.73%, EUR/USD, EUR/CAD, EUR/GBP, EUR/AUD on EUR weakness.
Oil $85.79
Gold $1,153
ECB's Stark says that they may have entered the next phase of crisis - a sovereign debt crisis and says that the ECB still views record low interest rates as appropriate.
ECBs Stark Says Inflation Risks Seem Tilted to the Upside
USD Weekly Unemployment Claims worse at 484k vs. 439k. Reading was 460k last time.
USD TIC Long-Term Purchases better at 47.1B vs. 34.2B expected. Last time was revised down to 15.0B vs. 19.1B formerly.
USD Philly Fed Manufacturing Index comes out at 10am EST today.
FOMC's Bullard speaks at 12:15pm EST today.
CHF Gov. Board Member Jordan speaks at 1:30pm EST today.
Chinese Economy Grows 11.9%, Highlighting Threat of Overheating
South African Rand Slides to Two-Week Low on Rate-Cut Speculation.
Sean Hyman
DailyFX Forum Moderator
Debt is rising, the global economy is recovering and inflation risks will play a crucial role in determining when major central banks start their exit from their ultra-expansionary stance. On these points, there is broad agreement all round. However, the timing of fiscal and monetary policy tightening to deal with these developments is a bit more contentious, and it is here that our view differs from that of markets and many of our clients.
Joachim Fels & Major Pradhan, Global Economics Team, Morgan Stanley
• Dollar Recovers its Footing after Risk Appetite Encourages a Quick Drop to a Six Week Low
• Euro Unable to Secure Stability Sentiment as EU Warns of Tough Times Ahead
• British Pound Rallies after Jobless Claims Dive and the BoE Minutes Mention Inflation Risks
• Japanese Yen Funding Status Reinforced by BoJ Stimulus Expansion
The Greek crisis has brought sovereign debt to the forefront, capturing markets' attention. We think another dimension of the sovereign issue, the inflation risks inherent in high levels of public debt for economies that can print their own currency, is being overlooked by the markets. High levels of public debt in many advanced economies raise the spectre of inflation, in our view: if high debt is deemed undesirable, but the political will for higher taxes and lower spending is lacking, then ‘soft default' through inflation becomes a possibility.
Spyros Andreopoulos, Joachim Fels & Major Pradhan, Global Economics Team, Morgan Stanley
