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Euro Stays Weak As EU Imposes New Sanctions On Russia

Published 07/23/2014, 04:25 AM
Updated 03/09/2019, 08:30 AM

The euro stays generally weak as EU agreed to impose new sanctions on Russian officials for the suspected role in downing a Malaysia Airline jet over eastern Ukraine last week. EU ministers agreed to draft a new set of names that provide "financial or material" support to Russia's decision makers. And, they warned of further actions if there is no "full and immediate cooperation" from Russia and pro-Russia separatists on handing the crash aftermath. Nonetheless, the ministers still refrained from so called level three sanctions and would only prepare a list of possible options, including arms embargo, limits on dual-technology sales and measures targeting energy and finance sectors.

The euro is weakest against Aussie this week as the Australian dollar was lifted by inflation data today. Headline CPI accelerated to 3.0% yoy in Q2, up from prior month's 2.9% yoy but was below expectation of 3.1%. RBA trimmed mean CPI jumped sharply to 2.9% yoy versus expectation of 2.7% yoy. RBA weighted median CPI was unchanged at 2.7% qoq. The headline inflation was at the upper bound of the 2-3% inflation limit and that should be strong bullet for RBA to keep rates on hold. There were talk that RBA could be forced to raise rate if the acceleration in inflation continues. But overall, the RBA is expected to wait further and start to consider rate hike next year.

BoE minutes will be a major focus today. Markets will look for clues on the timing of BoE's rate hike from the current record low of 0.50%. BoE governor Carney's message has been rather conflicting recently but markets are pricing in a hike from the central bank next February. The more important information would be MPC member's general view on the timing of stimulus withdrawal. Carney will also speak in Glasgow today.

Elsewhere, Canada will release retail sales and eurozone will release consumer confidence today.

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