FOMC Minutes Shows Fed's Cautious Approach

Daily Analysis - 07/07/2016

Fed Members Reluctant To Change Views on Single Jobs Report


The FOMC meeting minutes from the June 14 - 15 policy meeting released yesterday showed that Fed members preferred to wait and assess more data before taking a decision on interest rates. Officials were however divided on the reasons behind the weaker than expected jobs report in May, with some calling it transitory while others said that the pace of growth in the labor markets was slowing.

Germany Factory Orders Stay Flat

Factory orders in Germany released on Wednesday by statistics office Destatis showed a flat print. Factory orders came out unchanged after falling -1.90% in April and were below forecasts of a 1.00% increase. New orders in manufacturing increased 0.50% in May, while domestic orders fell -1.90%. Foreign orders increased 1.40% while orders from the euro area gained 4% during the month. On a year over year basis, German factory orders were down -0.20% on the month in May. April's annualized orders were revised up from -0.50% to -0.40%.


Swedish Central Bank Keeps Interest Rate on Hold

The Swedish Riksbank left interest rates on hold at its meeting on Wednesday as Sweden's inflation rate remained weak, rising 0.60% on the year over year basis. Keeping rates unchanged at -0.50%, after cutting rates in February this year, the central bank's policy move was well anticipated by the markets. The low rates are expected to remain in place until July 2017, according to the central bank's deputy governor Henry Ohlsson. At its monetary policy meeting, the central bank said that there was still scope for rate cut further noting that it expects interest rates to ease to -0.45% by the third quarter of 2017.


US Trade Deficit Widens In May

Data from the US Bureau of Economic Analysis showed that the trade deficit in the US widened to $41.14 billion in May, up from $37.38 billion in April. The trade deficit was more than the forecast estimates of $40 billion. The US recorded the trade deficit as imports outperformed, rising 1.60% to $223.5 billion in May. The value of exports fell -0.20% to $182.4 billion. The net trade deficit is expected to affect second quarter GDP growth.


Canada Posts Record Trade Deficit in May

The Canadian economy posted a trade deficit of $3.28 billion beating estimates of a $2.70 billion. Exports fell -0.70% with 8 out of 11 sub-sectors showing a decline in exports. In the energy sector exports increased 1.70%, marking the highest month over month increase. Imports fell 0.80% on the month on account of lower imports of aircrafts and transport equipment and parts. Exports to the US which accounts for nearly 80% of Canada's global trade in May increased 3.60% while imports were down 1.10%.


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