Dear Reader,

Today's overview of economic news and market action

• There was a mixed mood on markets last week, amid somewhat choppy trading conditions …
• Currency-wise, the yen was volatile as speculation grew that the BoJ may tighten policy this week …
• In level terms, USD/JPY is operating in the top half of the ¥153-154 range …
• EUR/USD opens this morning near the midpoint of the $1.08-1.09 corridor …
•  EUR/GBP is in the bottom half of 84-85p …
• Meanwhile, GBP/USD is changing hands in the upper end of the $1.28-1.29 band …
• This week, a number of key central bank meetings will take place (Fed, BoJ, BoE) …
• Data-wise, the US labour market report and EZ flash HICP inflation are due …

All rates quoted are indicative market rates.

No summer vibe to markets yet

Despite being in the midst of the summer holiday season, political events, macro data surprises, central bank commentary and global trade tensions have meant that the normal lull that tends to set into markets around this time of year, has been absent so far. 

Consumer prices rose by 0.4% in Jun, amid an increase in transport and hospitality costs. However, the YoY rate fell to 2.2%. HICP inflation rose by 0.3% in the month, with the annual rate declining to 2.0%.

ECB keeping its options open on rates outlook

In the past week we have seen the July/August round of the key central bank meetings get underway, with the European Central Bank (ECB) first up. As expected, its Governing Council kept interest rates unchanged. This means that the Deposit rate remains at 3.75% while the Refi rate stays at 4.25%. 

The ECB meeting for July saw the Governing Council keep its key interest rates unchanged. This means that the Deposit rate remains at 3.75% while the refi rate stays at 4.25%. The ‘hold’ on rates in July follows the 25bps rate cut implemented in June to the main interest rates. This represented its first rate change in six meetings after previously being on a rate hiking cycle.