An abundance of observations from key global policymakers throughout the week underscored the more hawkish outlook for monetary policy as general economic conditions brighten. This was mostly felt after European Central Bank President Mario Draghi highlighted the general advances in the Euro Area economy when it came to avoiding deflation, promoting GDP growth, and lowering unemployment. These views were widely interpreted as a signal that bond purchases may be tapered during the second half of the year in a gradual form of tapering, spurring a rally in the Euro.
Adding to the general sense of optimism was Fed Chair Janet Yellen’s assertion that the banking system was stronger than ever and that another major crisis was not anticipated. Meanwhile, on the data front, final first quarter GDP figures from the United States and United Kingdom were announced. The UK figure remained unchanged relative to earlier estimates, staying at 2.00% annualized growth while quarterly expansion printed at 0.20%. The US figure was revised higher, with the final number coming in at 1.40% compared to the 1.20% reported a month earlier. Inflation data from Japan was not quite as upbeat, with the core and headline figures coming in at 0.40% despite the improvement in household spending fundamentals.
