North American markets open as the euro rate touches a 3-month high. Global markets continue to digest Wednesday’s economic data supporting stronger than expected first quarter growth, contrasted by very weak US retail sales for the month of April. Helping the euro’s rise is another lift in euro zone government bond yields that have, for the past few weeks, kept global equity markets within a tight range. Economic data has been very limited on Thursday and Greek headlines have pushed to the background for the most part. Various headlines have been circulating about a request for a push back on the deadline for July and August payments, but to this point nothing has been confirmed, nor has any impact been felt. This morning, US weekly jobless claims were released and at 10:30am EST, the Bank of Canada Review will be released.
Sterling remains this week’s big winner, now one week removed from last week’s Conservative election victory. The world had been expecting a hung parliament and continued political uncertainty, but David Cameron’s Conservatives have squashed that with their victory, pushing the pound up more than 4% since May 6th. Yesterday, the Bank of England released its Inflation Report, which had multitude of conclusions and projections. The Central Bank cut its 2015 growth forecast from 2.9% to 2.5% and stated the first rate rise is expected to take place somewhere around the second quarter of 2016. At the moment, the Bank does not forecast inflation to return to the important 2% level until sometime in 2017. Sterling remains a buy on dips.
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