Awaiting ECB and Bank of England Decisions Plus U.S. Data

July 5, 2012

Investors have high expectations that the ECB will cut interest rates and that the Bank of England will also ease policy.

Scheduled U.S. data today include the ADP estimate of private sector jobs, the Labor Department weekly report of jobless insurance claims, weekly oil inventories, and the ISM non-manufacturing purchasing managers survey for June.

The dollar has climbed 0.5% against the euro and by 0.6% versus sterling and the Swiss franc ahead of the European central bank announcements.  The greenback is unchanged versus the Australian and New Zealand dollars, up 0.1% against the yuan and loonie and off 0.1% relative to the yen.

Oil prices rose another 0.6% to $88.16 per barrel as Norwegian workers continue to strike.  Gold dipped 0.2% to $1618.30 per ounce.

Ten-year British gilt and Japanese JGB yields are three and two basis points softer.  The German bund yield edged one basis point higher.

Spain’s government sold 3-, 4- and 10-year debt with mixed results.

Concerns have mounted over Greece’s continuing foot-dragging over the implementation of structural reforms.

Japanese stock and bond transactions generated a JPY 1.034 trillion outflow last week, the second such consecutive outflow of at least a trillion yen ahead of the end of the second quarter.

Bank Negara Malaysia left its overnight benchmark interest rate unchanged as expected at 3.0%.

German industrial orders recovered 0.6% in May from a revised 1.4% drop in April that had been reported initially as a drop of 1.9%.  Factory orders in May remained 5.4% below year-earlier levels.  In May, a 2.3% monthly advance in foreign orders outweighed a 1.3% drop in domestic demand.

Germany’s construction purchasing managers index rose 1.3 points but remained below the 50 no change line at 46.0 in June.  The last reading above 50 was in January.

Britain’s Halifax house price index rose 1.0% last month but was 0.5% lower in the second quarter than in 2Q11.  New car sales in Britain were 3.5% higher in June than a year before.

Dutch consumer prices fell 0.5% last month and showed the same 2.1% on-year increase as recorded in May.  Irish industrial output climbed 1.6% on month and 4.9% on year in May.

Filipino consumer prices increased 0.5% in June and posted a 2.8% 12-month rate of rise.

The Hong Kong purchasing managers index edged back to 49.8 in June from 49.4 in May but remained below the above-50 readings in the first four months of 2012.

Australia posted a AUD 285 million goods and services trade deficit in May versus shortfalls of 26 million Aussie dollars in April and AUD 1.004 billion in May 2011.

The ECB rate announcement is due at 11:45 GMT and will be followed at 12:30 GMT by a press conference.  Just in is the announcement from the Bank of England that the Monetary Policy Committee has indeed decided to bump its asset purchase program total up by a further GBP 50 billion to the new ceiling of GBP 375 billion.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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