Weekly financial market overview 06.07.-12.07.
Main events of the previous week
Last week, face-to-face informal negotiations on the Braxit terms proceeded in London. After the last meeting, Michel Barnier said that there are significant differences between the EU and the UK. The EU chief negotiator said that his team will continue to work with patience, respect and determination, also emphasizing that regardless of the results from the negotiations, from January 1, 2021 there will be inevitable changes. The UK ruled out the possibility of extending the December deadline to reach an agreement. Both sides agreed to resume negotiations last month and held their first face-to-face negotiations in early July since the start of the coronavirus pandemic. If they cannot make a deal by the end of the transition period at the end of the year, the UK will leave the single EU market and the Customs Union without any agreement. On July 8, Mr. Barnier stated that they are working hard to reach a fair agreement with Britain, including in the field of fisheries and “level playing field”, so that the UK does not undermine the EU’s common market by lowering standards and increasing government subsidies. Both sides have been deadlocked over the issues on fishing rights, an area where they previously pledged to reach agreement last month. The EU wants to maintain its existing access to British waters for vessels from member countries in order to avoid economic shocks for their fishermen. But the UK wants to hold annual talks with the bloc on access to its waters, as is currently happening with countries such as Norway. The meetings will continue in Brussels next week, and the next round of negotiations will take place on the week of July 20 in London.
US. Initial jobless claims for the week was registered in the amount of 1 million 314 thousand, which is 99 thousand less than the previous week and 60 thousand less than predicted by analysts.
Eurozone. Retail sales in May grew by 17.8%, while it was expected that the growth rate of retail sales would be 15%. In turn, retail sales in annual terms decreased by 5.1%.
China. The consumer price index in June fell by 0.1% compared to May, in turn, annual inflation was 2.5%. Both indicators were within analysts’ expectations.
Key events this week
- On Tuesday, data on industrial production for May will become known in the Eurozone, Japan and the UK, and the US will report on price increase in June.
- On Wednesday, the Bank of Japan will report on its decision on the key interest rate, as well as on a further QE steps and the US will publish data on weekly changes in oil reserves.
- On Thursday, China will publish data on second-quarter GDP growth, as well as data on retail sales, industrial production and unemployment in June. In turn, the US will report on the initial jobless claims for the week and the ECB will report on its plans to stimulate European economy.
- On Friday, inflation figures for June will be announced in the Eurozone.
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