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US Bond Market Week in Review: The Fed Has to Rethink Their 2% Inflation Target

By: HaleStewart

For what seems like forever, the Fed has been saying they are using a 2% inflation target. Given this expansion’s weak growth, this seems to be a fair and appropriate number. But intuition can be deceiving. The San Francisco Federal Reserve has issued several reports showing the natural rate of interest to be right around 0% -- which tells us the natural rate of inflation is probably below 2%. Read more

As Temperatures Rise, Europes Economy Shows Signs of Cooling

By: xemarketanalysis

OVERVIEW The service sector PMI in Europe disappoints as activity tails off as we approach the end of the second quarter Sterling rallies helped by interest rate expectations that UK interest rates may go higher sooner rather than later Bank of Mexico raises interest rates to 7% The US dollar sidelines while market waits for inflation data next week Canadian inflation data disappointed by growing by just 0.1% in May and 1.3% y/y forcing the Canadian dollar to drop 0.5% in value HIGHLIGHT One year on from Brexit, Theresa May has offered that no EU citizen living lawfully in Britain will need to leave and those that have lived in Britain for five years will have 'settled status' and will be eligible to health care, pensions, benefits and education just like a British national. US DOLLAR The US Dollar has weakened a little as we await further clues for the outlook on interest rates with next week's inflation data being key. BRITISH POUND The Pound has rallied over the last 24 hours as talk of the potential for interest rate hikes start to heat up while Theresa May initial discussions on Brexit meet with a relatively warm reception from the EU leaders EURO The service sector PMI data dropped to 54.7 in June from a previous reading of 56.3 in May, which was a surprise to the market which was expecting a steady continuation in the pick-up in activity. CANADIAN DOLLAR The Loonie weakened by 0.5% as inflation fell short of expectations of growth of 0.2% in May and only rose 1.3% y/y. AUSTRALIAN DOLLAR The Australian dollar ends the week higher but held back from making further gains on talk of a second Australian state looking to charge its own bank tax. FEATURED CURRENCY The Central Bank of Mexico raised interest rates by 25bps to 7% in line with expectations and this is now expected to be the final hike in the recent cycle. Read more

New home sales confirm slowdown - but not negative

By: New_Deal_democrat

In my reports on housing permits and starts over the last week, I pointed out the added importance of today's new home sales report. Permits and starts both turned south to new 12 month lows and single family permits at least slowed to a 6 month low. Read more

XE Market Analysis: North America - Jun 23, 2017

By: XE Market Analysis

EUR-USD lifted before capping out 1.1187, ahead of reported option-related selling interest into 1.1300. The pair subsequently drifted to a low of 1.1161 before settling around 1.1175. The flash June composite PMI reading undershot expectations, though still pointed to relatively robust growth, while price increases slowed, which should keep the ECB hawks at bay. Read more

XE Market Analysis: Europe - Jun 23, 2017

By: XE Market Analysis

The dollar has traded mostly softer so far today. EUR-USD has drifted moderately northward, pushing toward recent range highs in the upper 1.11s. Cable has seen a similar price action in rising above 1.2700, making this the third consecutive up day the pair has seen. Read more

Central Banks Signal Shift Away From Stimulus

By: xemarketanalysis

OVERVIEW The Norwegian central bank kept interest rates on hold as expected, but signalled a change in bias, removing guidance that it could cut rates this year. The New Zealand central bank left rates on hold as expected. UK Manufacturing activity strengthened again in June as factory orders hit their highest level in nearly 30 years. The ECB's economic bulletin reported that economic data points to solid growth in the euro zone in the second quarter. Canadian retail sales rose 0.8% in April , versus 0.2% forecast HIGHLIGHT Oil prices have fallen 19% in less than a month, to their lowest levels since August last year. Read more

XE Market Analysis: Asia - Jun 22, 2017

By: XE Market Analysis

The dollar has remained on a softer tack during the pre-Europe session in Asia. The narrow trade-weighted USD index logged a three-day low at 97.12 as EUR-USD lifted to a three-session high at 1.1177, and USD-JPY to a three-day low at 110.95. Oil prices managed to find a toehold after tumbling 6% since last week's closing level, which helped elicit a rebound in stock markets in Asia (ex Japan), and which in turn gave USD-JPY and yen crosses a prop. Read more

XE Market Analysis: Europe - Jun 22, 2017

By: XE Market Analysis

The dollar has remained on a softer tack during the pre-Europe session in Asia. The narrow trade-weighted USD index logged a three-day low at 97.12 as EUR-USD lifted to a three-session high at 1.1177, and USD-JPY to a three-day low at 110.95. Oil prices managed to find a toehold after tumbling 6% since last week's closing level, which helped elicit a rebound in stock markets in Asia (ex Japan), and which in turn gave USD-JPY and yen crosses a prop. Read more

XE Market Analysis: Europe - Jun 21, 2017

By: XE Market Analysis

The yen firmed up and dollar gains stalled today as a more risk-off tone took hold in global markets, USD-JPY settled I the lower 111.0s, down from yesterday's four-week high at 111.79. Yesterday's 3%-plus plunge in oil prices agitated a pullback in stock markets, which has been supportive of the yen. Read more

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