Yesterday was positive for Dollar, what is particularly visible on the USD/JPY.

The first reading of US GDP growth in the second quarter surprised with the +4.0% result against a +3.1% forecast (quarterly result annualized, multiplied four-fold).

Yesterday,  FOMC monetary policy statement was the main event in the macro calendar. See the FOMC statement and analysts comments.

In addition to FED, other central banks also expressed their forecasts.

Ben Broadbent (Bank of England) said in an interview with Bloomberg that Pound Sterling is likely overvalued. He added also, that the weakness in wages may indicate that BoE undervalued labor market downfall. Referring to interest rates, Mr. Broadbent said that interest rate increases should not be a shock, and that it will be limited and gradual. In his opinion, Pound may begin to decrease as the global economy recovers.

Another speech was gien by Mr. Kiuchi from the Bank of Japan, who skeptically referred to the country’s situation. He stated that the recovery in production is relatively moderate and weakness in this area (industrial production in June fell by 3.3%) may be a result of sales tax increase and soft export – companies have reduced production more than it was expected. Despite this, Kiuchi believes in further economic recovery and sees inflation on the desired levels.

Meanwhile, the European Union and the United States bring further economic sanctions against Russia and the media started to sum up potential losses which may influence countries strongly associated with the Russian market. It seems that Poland and Germany are seriously exposed to the losses resulting from trade restrictions. Russia responded with embargo on some Polish food products.

Yesterday evening brought two other messages. Banco Espirito Santo, found itself in a difficult situation. Noting the gigantic loss of more than 4 billion EUR, bank fell below the required capital minimum and no one knows how BES will find funds to normalize required reserves. The topic is quite noisy in the press, although many analysts point out that systemic risk of BES’ failure is rather small.

Thursday started badly for Australia and quite good for Germany. In Australia prices of imported goods fell (-3.0% vs +3.2% prev.), while number of building permits issued in June shrunk by 5% after May’s 10.3% increase. Negative results therefore can be regarded as an exceptionally strong rebound from the previous readings. Meanwhile, Germany retail sales grows by 1.3% against 1.1% consensus and -0.6% prev.

Today we face German and EU labor data, as well as the EMU CPI. Credit Agricole expects CPI decline to 0.4% year-over-year (consensus 0.5%), mainly due to declining food and energy prices. Core inflation is expected to remain at the 0.7%-0.8% level.

We should also pay attention to the United States employment readings: the index of labor costs, as well as weekly jobless claims. After yesterday ADP reading bit below expectations, today’s data may confirm or refuse the tomorrow’s employment report outlook.

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