ECB open to further steps toward slow stimulus exit

Last Thursday, the Euro rallied against its US counterpart after the minutes from the European Central Bank’s (ECB) June 7-8 meeting showed that the Central Bank left the door open to removing its Bond-buying pledge.

ECB officials already discussed taking out that so-called “easing bias” from their policy message but decided against it because the Eurozone’s economic recovery had yet to result in achieving the bank’s main policy objective which is higher inflation. The ECB Governing Council judged that it was important to stress the stronger momentum of the Euro area recovery, while emphasizing that inflation remained subdued.

Last week, the Dollar gained in early Asian sessions, getting a leg up against the Yen after the Bank of Japan (BoJ) increased its purchases of Japanese government Bonds (JGB) in a move aimed at stemming a rise in Yields. The BoJ offered to buy an unlimited amount of 10-year JGBs at a Yield of 0.110% and also increased its buying of five to ten year JGBs through an auction to 500 billion Yen from 450 billion Yen. Meanwhile, investors will be focused today on the nonfarm payrolls report where Reuters expect US employers to have added 179,000 jobs last month, above May’s relatively small gain of 138,000.

Last Thursday, the Brazilian Real fell against its major peers, taking down Brazilian Stocks, on lingering concerns over a political crisis. Demand for Brazilian assets has fizzled in recent months, as traders feared a corruption scandal could delay the implementation of President Michel Temer’s ambitious agenda, which is seen as critical to fuel long-term economic growth.