Draghi Says More Cuts Possible

ECB President Mario Draghi raised the possibility of more interest rate cuts, saying that the data will decided if lower rates are needed. The pound led while the antipodean currencies lagged in a quiet start to the week. Details on Fridays Premium Insights found below.

Draghi did not hint at any imminent cut but his comments show that the 0.50% and 0% deposit rate may not be the lower bound. He also reiterated many of his comments from the ECB press conference, emphasizing that some downside risks had materialized.

The Eurogroup meeting in Brussels is focused on Spain with bailout requirements likely to be stretched out for another year. Cyprus is also on the agenda and musings about the summits later in July could move the market.

The euro was steady on Monday, edging to 1.3220 from 1.2300 at the beginning of US trading. The S&P 500 was quiet, slipping 0.2% to 1352.

Oil was a mover, gaining more than $2 to $86/barrel on talk of Chinese stimulus and rumors that China will cut retail fuel prices on Wednesday. Talk of QE3 also helped after the Fed’s Williams said officials have fallen well short of their employment mandate and that he would prefer bond and MBS buying if needed.

The lone indicator of note on the calendar is the Australian NAB business confidence indicator for June at 0130 GMT. The prior reading was -4.

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