Busy week of earnings and Central banks meetings . .

In total, 15 central banks are scheduled to meet this week. The Bank of Japan’s rate decision is due on Friday local time and will be closely watched for any hints of more easing in the face of a stronger yen after the U.K.’s decision to leave the European Union and a slowdown in the economy.

 

U.S. stocks retreat from record levels as investors turn cautious ahead of a busy week of earnings and central bank meetings. Stocks pared early losses, but the S&P 500  closed down 6.55 points, or 0.3%, at 2,168.48, with all sectors finishing lower except consumer discretionary, which logged a fractional gain. Earlier, the index had been off by as many as 13 points. A drop in oil prices weighed on sentiment, hitting energy companies once again, with the sector selling off 2%. Recent economic data, including an upbeat reading of U.S. manufacturing released Friday, cemented the idea that the dollar’s strength has reasons behind it — it’s not just speculation, but rather the difference in economic fundamentals between the U.S. and the EU. . 

The greenback inched lower against the yen, as investors were reluctant to move aggressively ahead of the monetary policy meetings in the U.S. and Japan later this week.The greenback briefly touched a high of ¥106.74 in Asian trade, suggesting strong appetite among Japanese importers and other corporate players for dip buying of the dollar for regular commercial trade settlement, but later pulled back. Overall, investors are expected to largely sit on the sidelines before the Federal Open Market Committee meeting on July 26-27 and the BOJ’s policy setting meeting on July 28-29. The Federal Reserve kicks off its monetary policy meeting on Tuesday and will announce its decision on Wednesday at 2 p.m. Eastern time. The central bank is widely expected to hold interest rates steady and stop short of signaling a possible rate increase in September because of continued uncertainty about the economic outlook. While the Federal Reserve will probably keep key borrowing costs on hold this week, economists expect the BOJ to ease policy. Investors are also awaiting details of what Prime Minister Shinzo Abe’s government will do to boost the world’s third-biggest economy, with decisions on that expected next week. Speculation about co-ordinated stimulus had stemmed the yen’s ascent after it soared past 100 to the dollar in the wake of Britain’s vote to leave the European Union. Japan’s government on Tuesday submitted a list of projects to the ruling Liberal Democratic Party, although the document didn’t provide specifics on the potential size of the spending package or how it will be financed. The Nikkei newspaper reported on Tuesday that the plan would include 6 trillion yen ($57 billion) of new spending. 

 

J. Mason ♦

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