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Global equity markets ended mostly higher last week, following upbeat economic data releases across major economies. UK markets ended in the positive territory last week, on the back of weaker Pound. On the data front, UK’s NIESR GDP slightly rose in the April-June 2017 period. European markets closed higher last week, amid a rise in banking sector stocks. In major news, ECB’s June meeting minutes revealed that policymakers discussed ending the central bank's extraordinarily stimulatory monetary policy. On the macroeconomic front, Eurozone’s final Markit manufacturing PMI recorded a surprise rise and notched its strongest level in 74 months in June. Further, the region’s final Markit services PMI unexpectedly surged in the same month. Moreover, Germany’s final Markit services PMI surprisingly advanced in June. US markets painted a positive picture for the week, driven by a robust US non-farm payrolls data for June. The markets were also supported by an unexpected increase in ISM non-manufacturing PMI in June and ISM manufacturing PMI which notched its highest rise since August 2014. Asian markets ended the week on a negative footing, amid rising geopolitical tensions after North Korea launched its first intercontinental ballistic missile. In economic news, China’s Caixin services PMI dropped in June, albeit continuing in expansion territory. Meanwhile, Caixin manufacturing PMI expanded at a faster pace in June, its highest rise in 3 months. Japan’s preliminary leading economic index advanced more-than-expected in May.
 
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Currency Update

The Euro ended weaker against the greenback. Data revealed that Eurozone’s producer price inflation declined more than expected on a monthly basis in May. The GBP fell against the USD, after UK’s manufacturing production unexpectedly retreated on a monthly basis in May, amid a decline in output of transport equipment, food, beverages and tobacco. Further, monthly industrial production recorded a surprise drop in the same month. Additionally, construction output surprisingly eased to its lowest level since October 2015 on a monthly basis in May. Moreover, the trade deficit widened more-than-expected in the same month. The USD ended firmer against its major counterparts after US labour market strenghtned more than exected in June. Moreover, ISM manufacturing and services PMI supported the Dollar.
 
Fed concerned over US inflation outlook, while ECB tilts
towards tapering monetary stimulus…


The Federal Open Market Committee’s June 13-14 meeting minutes revealed that the Fed policymakers were highly split on the outlook for US inflation and the way it might affect the future pace of interest rate increase. Furthermore, Fed indicated that it will start reducing its $4.5 trillion balance sheet as early as September. Moreover, senior officials were determinant on increasing interest rates even with muted inflation levels. Additionally, they stated that US economic growth rebounded since the first quarter led by a rise in business investment and steady consumer spending. On the other hand, the European Central Bank’s June meeting minutes indicated that officials were ready to reduce their monetary stimulus but at a slower pace out of fear of causing market turmoil. However, they added that if confidence in the inflation outlook enhanced further, the so-called easing bias would be reviewed at future meetings.
 
The Week Ahead

Going ahead this week, investors’ will keep a close watch on US consumer price inflation, retail sales and Michigan consumer confidence index along with UK’s claimant count change, ILO unemployment rate and Germany’s consumer price index for further direction.
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