Daily Market Analysis – 09th July, 2015
By FxGrow Research & Analysis Team
FOMC Minutes: Fed Cautious over weak Consumer spending, Risks in Greece and China
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced.” – FOMC.
"Many participants emphasized that, in order to determine that the criteria for beginning policy normalization had been met, they would need additional information indicating that economic growth was strengthening, that labor market conditions were continuing to improve, and that inflation was moving back toward the Committee's objective." – FOMC.
"Most participants judged that the conditions for policy firming had not yet been achieved; a number of them cautioned against a premature decision" – FOMC.
The FOMC minutes show that officials are cautious about the economic outlook. Their concerns include weak consumer spending, and drags on investment and exports resulting from lower energy prices and a stronger USD.
Concern over Greece and China, Fed officials were open to delaying their first interest rate increase since 2006 amid uncertainty over Greece’s future in the euro zone.
"While a worst-case scenario of a Greek exit from the euro leading to sizable financial and economic impacts on the global economy cannot be ruled out, it remains an unlikely tail risk" - San Francisco Fed President Williams.
In China, Stock markets have stabilized with the Shanghai Composite up 6.35% and the Shenzhen Composite up 3.76%. With support from the Chinese government to rescue stock markets, the People's Bank of China has cut interest rates to a record low; brokerages have committed to buy billions worth of stocks.
The Greek government sent a formal request for a new bailout to the European Stability Mechanism, asking for a three-year loan facility.
Greece has said it will provide details of credible and concrete reforms to its creditors today to try to secure a third bailout from the European Union and the International Monetary Fund.
Canada’s Building permits declined to C$6.7 billion for the month of May, showing signs that the Canadian economy struggled to regain momentum after shrinking in the first quarter of the 2015.
Crude oil is trading lower at $52.44 after a surprise build in US stockpiles.
Gold is trading higher in the Europe at 1164.45, while Silver is up at 15.39
09th July 2015 – 09:04hrs GMT
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