BoJ depression seems has not yet abated.
So, key points on the main economic events of this week were set forth in the analytical notes of its first half. Today, we can recap the meeting of the Japanese Central Bank and provide some additional clues on the ECB meeting with regard to the today’s data.
BoJ announced that they’re not yet going to close valve of the cash pipe, continuing to pump the economy with liquidity. Interest rate and asset purchase program remained unchanged. However forecasts of economic expansion and inflation were revised. According to the report, economy should ease off so far owing to the export increase, i.e. global demand pickup. Putting together the indicators of domestic consumption the picture remains gloomy:
Consumer confidence: Remains roughly unchanged from the beginning of 2017 at 43 points. The index below 50 points indicates uncertainty of households in the future. The household spending which correlates with the previous indicator shows a steady decline in the last two years. Business confidence rose to 17 points in July to the peak of several years and indicates the desire of firms to hire more and increase investments in fixed assets. However, wage growth, one of the key drivers of consumption growth, along with consumer confidence remains sluggish due to weak domestic demand. The increase in wages is for the most part announced only by exporters. The BoJ report highlights that companies are still in no hurry to raise prices for domestic products and wages accordingly due to negative consumer expectations.
The Central Bank also promised to maintain the targeting of bond yields at the same level, thus controlling long-term inflation expectations. The inflation forecast was lowered, and the target inflation rate will now be reached only in 2020.
In general, the report showed that the bank will adhere to an extremely dovish policy and is not going to join the Central Bank's ranks moving towards the normalization of the monetary regime. As mentioned in the previous analysis, the pairs CADJPY and AUDJPY amid growing divergence of Central Bank policies remain promising for mid-term long stands.
The European Central Bank left key points of its policy unchanged at today's meeting. Investors are waiting for Mario Draghi to answer the exciting question: does the ECB consider that the European economy is ready for a tightening cycle? The alignment of forces before the Draghi press conference: The EUR / USD pair has taken a comfortable position at 1.15, European and Asian stock markets are growing waiting for the extension of the era of cheap money. EM markets have gone into red territory, indicating a speculative flow into European stocks before the ECB meeting. The focus shifted from the US dollar to Europe, data on unemployment benefits do not look like a promising report for adjusting views on the US economy, given that employment in the US is close to the maximum.
UK statistics office has also released a report on retail sales today . The pound was completely tepid to th reading being under the control of other sentiments. Besides, retail sales have a very small share as a component of GDP. In an attempt to trace sustainable relationship with inflation, seasonal factors came into play- in this case, a hot summer period led to an increased demand for clothing. The indicator showed a three-percent growth in annual terms, with a forecast of 2.5%, but the contribution to GDP is only 0.1%.
Precious metals are in negative territory, oil holds gains after growth on Wednesday. The EIA report showed a decrease in stocks of 4.7M barrels, but it did not have a significant impact on prices.
BoJ announced that they’re not yet going to close valve of the cash pipe, continuing to pump the economy with liquidity. Interest rate and asset purchase program remained unchanged. However forecasts of economic expansion and inflation were revised. According to the report, economy should ease off so far owing to the export increase, i.e. global demand pickup. Putting together the indicators of domestic consumption the picture remains gloomy:
Consumer confidence: Remains roughly unchanged from the beginning of 2017 at 43 points. The index below 50 points indicates uncertainty of households in the future. The household spending which correlates with the previous indicator shows a steady decline in the last two years. Business confidence rose to 17 points in July to the peak of several years and indicates the desire of firms to hire more and increase investments in fixed assets. However, wage growth, one of the key drivers of consumption growth, along with consumer confidence remains sluggish due to weak domestic demand. The increase in wages is for the most part announced only by exporters. The BoJ report highlights that companies are still in no hurry to raise prices for domestic products and wages accordingly due to negative consumer expectations.
The Central Bank also promised to maintain the targeting of bond yields at the same level, thus controlling long-term inflation expectations. The inflation forecast was lowered, and the target inflation rate will now be reached only in 2020.
In general, the report showed that the bank will adhere to an extremely dovish policy and is not going to join the Central Bank's ranks moving towards the normalization of the monetary regime. As mentioned in the previous analysis, the pairs CADJPY and AUDJPY amid growing divergence of Central Bank policies remain promising for mid-term long stands.
The European Central Bank left key points of its policy unchanged at today's meeting. Investors are waiting for Mario Draghi to answer the exciting question: does the ECB consider that the European economy is ready for a tightening cycle? The alignment of forces before the Draghi press conference: The EUR / USD pair has taken a comfortable position at 1.15, European and Asian stock markets are growing waiting for the extension of the era of cheap money. EM markets have gone into red territory, indicating a speculative flow into European stocks before the ECB meeting. The focus shifted from the US dollar to Europe, data on unemployment benefits do not look like a promising report for adjusting views on the US economy, given that employment in the US is close to the maximum.
UK statistics office has also released a report on retail sales today . The pound was completely tepid to th reading being under the control of other sentiments. Besides, retail sales have a very small share as a component of GDP. In an attempt to trace sustainable relationship with inflation, seasonal factors came into play- in this case, a hot summer period led to an increased demand for clothing. The indicator showed a three-percent growth in annual terms, with a forecast of 2.5%, but the contribution to GDP is only 0.1%.
Precious metals are in negative territory, oil holds gains after growth on Wednesday. The EIA report showed a decrease in stocks of 4.7M barrels, but it did not have a significant impact on prices.
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