- ECB head Draghi: More stimulus in the pipeline
- Draghi: Central bank heads had extensive discussions on Brexit
- What UK Thinks Poll of Polls: 51% remain, 49% leave
- Fed head Yellen: Rate hike hinges on hiring rebound
Both Fed head Yellen and ECB Governor Draghi gave testimonies during the U.S. session but the latter had a mic drop moment when he shared that further stimulus is in the pipeline.
ECB Governor Draghi’s testimony – Dovish Draghi made an appearance in Brussels and shared his thoughts on the latest economic developments in the region. He assessed that recovery has gained momentum since the start of the year but that inflation remains subdued.
As for the Brelephant in the room, Draghi mentioned that the ECB has contingency plans in place should the U.K. decide to exit. He reiterated that they’re ready to use all tools in their mandate if necessary and that “further stimulus is in the pipeline.”
Fed Chairperson Yellen’s speech – The Fed head honcho had her own moment but her speech appeared to have gotten mixed reactions. Some zoomed in on her remarks about wanting to see a hiring rebound before hiking rates, as this underscores the May NFP disappointment, while others focused on her remarks about a pickup in wages and household spending.
Yellen also downplayed the chances of undergoing a recession but she did mention that the Fed has legal basis to implement negative interest rates if needed. For now, she pointed out that policymakers are watching labor market trends closely to figure out if the slowdown is just temporary.
Major Currency Movers:
EUR – The euro had a sharp bearish reaction to ECB head Draghi’s remarks about having additional stimulus ready.
EUR/USD fell from the 1.1300 levels to a low of 1.1247, EUR/JPY dropped from a high of 118.50 to a low of 117.78, EUR/GBP retreated further to .7667, and EUR/AUD is down to 1.5100.
USD – The Greenback managed to end higher against most of its peers as U.S. equities rejoiced on Yellen’s preference to take a cautious approach in tightening.
USD/JPY climbed from a session low of 104.58 to a high of 104.85, AUD/USD retreated from a high of .7514 to a low of .7453, USD/CAD bounced off the 1.2800 handle to 1.2828, and NZD/USD fell from .7171 to a low of .7121.
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