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U.S. markets were so eerily quiet during Comey’s testimony as traders kept their eyes and ears peeled for any hints that the Donald may have committed an impeachable offense.

Meanwhile, the pound took a heavy beating before the session closed as the results hinted that Conservatives might lose the majority.

  • ECB head Draghi: Tail risks to growth dissipated, inflation in line with forecasts
  • Draghi: Policy normalization hasn’t been discussed
  • Draghi: No rate cuts expected but wouldn’t hesitate to act if needed
  • ECB upgraded 2017 GDP forecast from 1.8% to 1.9% and also for next two years
  • ECB downgraded 2017 CPI forecast from 1.7% to 1.5%
  • BOC Gov Poloz: Housing market in Toronto and Vancouver remain strong
  • Poloz: Signs of a pickup in business investment and commodity prices
  • Former FBI head Comey: Confused by “shifting explanations” of Trump administration on his firing
  • Comey refrained from offering his opinion on Trump’s alleged obstruction of justice
  • Canadian housing starts at 195K vs. 205K forecast, 213K previous
  • Canada’s NHPI up 0.8% vs. 0.3% forecast
  • U.S. initial jobless claims at 245K vs. 241K consensus, 255K previous

Major Events/Reports

Relatively neutral ECB presser

As expected, ECB policymakers doled out downgrades to their inflation forecasts for this year and all the way until 2019 but Draghi gave a few upbeat remarks on how the economy is faring.

The 2017 inflation forecast was taken down a couple of notches from 1.7% to 1.5% while the next year’s estimate was lowered from 1.6% to 1.3%. For 2019, the inflation forecast was revised from 1.7% to 1.6%. The earlier estimates were made back in March this year.

For growth, this year’s estimate was upped from 1.8% to 1.9% while 2018’s GDP forecast was revised from 1.7% to 1.8%. For 2019, the GDP forecast was upgraded from 1.6% to 1.7%.

During the Q&A, Draghi admitted that not much has changed in terms of inflation, other than the usual fluctuations in food and energy prices. He added that they are not foreseeing a rate cut anytime soon as tail risks have dissipated and the threat of deflation is much lower. However, he did specify that they would not hesitate to act if things get much worse.

BOC Financial System Review

BOC head honcho Poloz assured that the housing market in Toronto and Vancouver remains strong, easing some fears that a property bubble is about to burst.

In the central bank’s Financial System Review, Poloz explained that he’s not seeing risks from housing capital but mentioned that they’re seeing a rise in uninsured mortgages. Canadian housing starts came in at 195K for May, short of the 213K forecast, while the new housing price index printed a 0.8% gain versus the projected 0.3% uptick.

Still, Poloz affirmed that default rates in Canada are very low and that lenders are buffered by other assets in case homeowners are unable to pay their mortgages.

He also added that he’s seeing a pickup in business investment and that commodity price risks are behind them, giving Loonie traders a bit more confidence that the Canadian economy could stay afloat.

No bombshell from Comey’s testimony

The much-anticipated tell-all from Comey turned out to be a dud as the former FBI director refrained from giving his opinion on whether or not Trump obstructed justice by telling him to drop the investigation on Flynn.

Instead, Comey started off by expressing his disappointment and confusion over how the administration defamed him and the FBI in providing “shifting explanations” about his firing. Members of the Senate proceeded with the Q&A in an attempt to gather some evidence on any potential wrongdoing, but Comey kept his cool and simply said that he took it as “a very disturbing thing, very concerning.”

  • S&P 500 index closed 2.25 points up to 2,434.25 (+0.09%)
  • Dow 30 index closed 8.84 points up to 21,182.53 (+0.04%)
  • Nasdaq is up 11.75 points to 5,891.50 (+0.20%)

Major Market Mover(s):

GBP

Sterling took a tumble during the latter part of the session as Brits headed to the polls today and forecasts hinted that the Tories could lose the majority. These are based on early results, though, and have yet to be made official.

GBP/CAD is down to 1.7261 (-1.35%), GBP/AUD fell from 1.7167 to 1.6949 (-1.22%), GBP/JPY is down to 140.25 (-0.53%), and EUR/JPY

NZD

Kiwi strength prevailed, as the commodity currency remained supported by solid fundamentals and improving risk appetite.

NZD/USD is up 22 pips to .7217 (+0.31%), NZD/CHF advanced from .6942 to .6983 (+0.63%), and NZD/JPY rose from 79.01 to 79.44 (+0.54%).

Watch Out For:

  • 12:50 am GMT: Japanese M2 money stock
  • 2:30 am GMT: Australian home loans (-0.9% expected, -0.5% previous)
  • 2:30 am GMT: Chinese CPI y/y (1.5% expected, 1.2% previous)
  • 2:30 am GMT: Chinese PPI y/y (5.7% expected, 6.4% previous)
  • 5:30 am GMT: Japanese tertiary industry activity (+0.5% expected, -0.2% previous)