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On July 2nd, European Central Bank (ECB) Governing Council member Stournaras stated that with the unexpected drop in energy prices and slowing inflation in the Eurozone, the central bank may not need to further tighten policy after its June rate hike. Latest data showed that Eurozone consumer price inflation fell to 2.8%, lower than expected, which he called a "clear downside surprise." He pointed out that the focus should now be on how businesses pass on changes in energy costs and the impact of the AI investment boom on the overall price system. Stournaras stated, "I dont think anything will change in July unless things deteriorate significantly." He tends to believe that policy should remain unchanged for some time. The ECB had previously raised interest rates to 2.25%. Regarding energy, he mentioned that Gulf central bank officials believe the recent shocks have had limited damage to energy infrastructure, and that Iran may release more crude oil supplies in the future, contrary to previous market assessments of energy shortages. He also warned that energy price increases tend to be quickly transmitted to end users, but price decreases are transmitted more slowly, reflecting insufficient competition in some European markets. Furthermore, the AI investment boom may also affect the prices of electronic products, especially imports from South Korea and Taiwan.July 2nd - German media reported on July 1st that the German Federal Prosecutors Office has filed charges against a Ukrainian national suspected of involvement in sabotaging the Nord Stream gas pipeline. According to multiple German media reports, the suspects name is Sergei K. German prosecutors accuse him of attacking civilian energy infrastructure, causing explosions, and damaging buildings.ECB Governing Council member Stournaras: Perhaps we should maintain the status quo for now.ECB Governing Council member Stournaras: I don’t think anything will happen in July.ECB Governing Council member Stournaras: We must monitor the indirect impact of war on prices.

AUD/JPY Exceeds 90.30 As RBA Considers Option To Raise Rates Prior To Pause

Daniel Rogers

Apr 18, 2023 14:02

AUD:JPY.png 

 

Following the release of the minutes from the Reserve Bank of Australia (RBA), the AUD/JPY pair surged above the 90.30-point critical resistance level. According to the RBA minutes, policymakers actively considered the decision to raise rates further. However, the decision to maintain the status quo was made after the collection of additional data.

 

Citing the resilience of Australia's financial system, RBA policymakers believed that the Board's future cash rate decisions would depend on the global economy, household spending trends, inflation projections, and employment forecasts.

 

Continue to monitor China's Gross Domestic Product (GDP) statistics. Compared to its stagnant performance in the final quarter of CY2022, the Chinese economy is estimated to have grown by 2.2%. Compared to the previous annual growth rate of 2.9%, the current annual growth rate for the economy is 4.0%. Australia is China's greatest trading partner, and stronger Chinese GDP data would strengthen the Australian Dollar.

 

The announcement of the People's Bank of China (PBOC) interest rate decision later this week will be crucial. Last week, the People's Bank of China pledged to provide additional monetary support to spur retail demand. Despite the reopening of China's economy following a period of economic restraint, the country's inflation rate has been consistently declining over the past few months.

 

According to Jiji news and Reuters, the Bank of Japan is reportedly considering a projection for consumer price growth between 1.6% and 1.9% for the 2025 fiscal year, a move seen as preventing market participants from betting on the central bank's departure from stimulus. This has also delayed the possibility of a shift away from an expansionary monetary policy, which cannot be considered until the Japanese inflation rate persists above 2%.


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