WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The US non-farm payrolls report for June surprised positively somewhat allaying concerns about a broader slowdown of the labor market outlook. In FX markets, the JPY lost some ground on improved risk appetite while the EUR/USD continued to consolidate within 1.0900-1.1200. Looking at this week’s calendar, the main focus is on the BoE MPC meeting on Thursday where the Central Bank is likely to deliver a 25bps rate cut, leaving the door open for lower interest rates and resumption of its QE programme at the August meeting when its updated Inflation Report will also be published.
GREECE: Though Greece’s adjustment programme is not included in the agenda of today’s Eurogroup, Minister of Finance Euclid Tsakalotos is reportedly likely to raise two issues on the sidelines of the meeting: (i) the adoption of a lower primary fiscal target beyond 2018; and (ii) the procedure for the review of the four systemic banks’ Board of Directors. On the data front, the CPI dropped by 0.7%YoY in June marking the 40thconsecutive month of deflation while the EU-harmonized inflation returned to positive rates after three consecutive months of falling prices.
SOUTH EASTERN EUROPE
ROMANIA: The EUR/RON traded range-bound over the first four sessions of last week, hovering around levels of 4.5120/300. On Friday, however, it managed to break the lower limit of the said interval dropping as low as 4.5050, a 0.50% appreciation over the week. The RON money market remained very liquid, while RON government bonds extended their recent rally.
SERBIA: The dinar was broadly firmer against the EUR last week, prompting repeated Central Bank interventions in the FX markets in order the halt the RSD’s upside momentum.
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