Anchor resume from 14 to 21 of July 2017
Friday, 21 of July 2017
The Euro reached maximum levels since January 2015 after the appearance of Mario Draghi during Thursday. The common currency rebounded to 1,164 EUR/USD, which added a +10,6% YTD with respect to the US dollar, a factor that could have a negative impact on exports and consequently on corporate profits.
Although the speech had a cautious tone, without announcing changes in monetary policy and postponing the discussion on the withdrawal of stimulus until the meeting of October 26th, markets took the reiterative in the strength of the economy, confidence in The monetary policies applied, and the fading of risks as a signal to initiate the withdrawal of stimulus in the economy. The effect that this had on the markets on the other hand was negative, leading the main European selectives to turn downwards anticipating more restrictive financial conditions.
As for the rate decision, in line with forecasts, the reference rate remained unchanged at +0% and the deposit rate at -0.40%. While as regards the purchase of assets, the ECB president said that they will remain at least until December in view of the evolution of inflation.
Again, the US president was in the spotlight due to his incapacity to implement reforms in the economy after four electors of the republican side stood against the sanitary reform proposed by Donald Trump. In this way, fears grew over the government's ability to carry out the announced fiscal reform, a factor that pushed the dollar down, which continued to lose strength with respect to its main peers.
The selectives maintained levels of historical highs getting up by a season of business results that is proving better than expected. The 74,2% of S&P500 companies reported results that exceeded forecasts of the EPY. The healthcare, technological and industrial sectors have been the best ones. While within the raw material sector only 33% of the companies reached forecasts.
For next week, we will mark the FOMCs meeting as a star event on Wednesday, as Janet Yellen's statements will have a direct effect on the markets and the dollar. We hope that the positive vision of the labor market will be maintained since the latest data that released pointed to further reductions in the weekly requests for unemployment benefits (now 233.000). In addition, there was a growth of +6% in mortgage applications and 1,215 new housing starts.
From the Asian continent we also have references from central banks, in this case Japan. As expected in the face of low levels of inflation and the country's difficulties in boosting this indicator, Kuroda announced the maintenance of rates and economic policy unchanged, postponing the inflation target of +2% until the 2019 .
As for the data published during the week, we highlight a further deterioration of the trade balance in June (JPY 439.900 million compared to the expected JPY 488.000 million), due to the +15% growth in imports deteriorated from the +9% increase of exports.
With respect to the Asian giant, the latest GDP data surged, surpassing expectations of +6,9%, and a +7,6% increase in industrial production in June, favoring further developments in the Hang Seng, which broke the technical resistance at 26.565.