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Analysts at ANZ explained that the euro firmed modestly, while the 10-year bund yield rose the best part of 5bps to 0.45% ahead of Tuesday’s euro area releases out tonight.  

Key Quotes:

“Equity markets traded with a defensive tone ahead of central bank meetings. The S&P500 fell 0.4%, the DAX was off 0.5% and the FTSE 100 was unchanged.  

The NASDAQ dropped a more marked 1.3% on the back of declines in tech stocks.  

The yield on the US 10-year note edged higher to 2.97%. Oil was firmer with WTI up 1.9% and now sitting at $69.9/bbl on the back of a weaker USD and continuing supply concerns. Gold was down 0.1%.  

The peso firmed, with US Commerce Secretary Ross saying NAFTA negotiations, particularly with Mexico, may be close to wrapping up.”

“The next couple of days bring policy meetings from the Bank of Japan, FOMC and Bank of England. There are some expectations that the Bank of Japan may tweak its yield curve control policy today.  

But given that inflation remains frustratingly low, it is difficult to see much to warrant a change in policy at this stage.

On Wednesday night, the FOMC is expected to acknowledge the need for further policy normalisation (with a hike expected in September) and the Bank of England is expected to raise interest rates 25bps to 0.75%.  

Some key data releases for the euro area are out tonight, including July inflation data, advance Q2 GDP and June unemployment numbers. GDP growth is expected to have stabilised in Q2 at 0.4% q/q (implying 2.2% y/y). Inflation is expected to be steady at 2.0% y/y (core 1.0%) and unemployment is expected to have edged lower to 8.3% (8.4%).”