July 02, 2024 at 12:40PM
Euro’s lack of faith highlights risks surrounding French elections
Stocks stay pressured in European morning trade
Eurozone May unemployment rate 6.4% vs 6.4% expected
Eurozone June preliminary CPI +2.5% vs +2.5% y/y expected
ECB’s Vasle: We can cut rates further if things go as expected
Fed’s Goolsbee: Interest rates are restrictive now
ECB’s Centeno: Every meeting is open for us to make a decision
ECB’s Muller: We can probably cut rates again before year-end
ECB’s de Guindos: We are not following a pre-determined path on interest rates
European equities sag at the open as early week optimism stumbles
What are the main events for today?
ECB’s Lane: June inflation data seems in line with our assessment
ECB’s Wunsch: There is room for second rate cut barring any major negative surprises
BOJ expected to trim monthly bond purchases by ¥16 trillion in first year – survey
The
European session was pretty much uneventful. We got some ECB speakers
reaffirming the need to wait for more data before deciding on a rate cut in
September. The main highlight was the Eurozone inflation report which showed
the headline reading ticking lower to 2.5% Y/Y and the Core measure remaining
unchanged at 2.9% Y/Y.
Zooming
out, inflation in the Eurozone stabilised around 2.5% Y/Y for the headline
reading and 2.9% Y/Y for the Core measure. The bad news for the ECB is the
stickiness in services inflation which has been stuck at 4.0% Y/Y since
November 2023.
The central
banks are now switching their focus from inflation to the labour market as
that’s what could keep inflation higher for longer. We saw ECB’s Vasle this
morning emphasising that the labour market will be important for the next
steps. This is also something that has been transpiring from the Fed’s
statements and speeches.
In the
markets, the US Dollar is basically flat on the day. Equities are down. Bonds
are mostly flat. Gold is lower and Crude oil is higher.
The focus
will now switch to the US Session as we get the US Job Openings which are
expected to ease further, and Fed Chair Powell
speaking the European Central Bank Forum on Central Banking 2024 in Sintra,
Portugal.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
