All eyes turn to the ECB

Today's news headlines:

‘Italy thrown into chaos as Draghi’s coalition abandons him’. Italy is staring down the barrel of a snap election as Prime Minister Mario Draghi moves closer to the exit door. Draghi has lost support from the Five Star Movement, the nationalist League, and the Forza Italia, with elections to be called as soon as October to re-organise a government in disarray. Markets have reacted in kind, with the Italian ten-year bond yield reaching the highest level since June. This has put further pressure on the European Central Bank to finalise its crisis tool as borrowing costs rise again. (Bloomberg)

‘UK debt cost surge sends warning to next prime minister’. The UK budget deficit has risen more than 20% year over year in June, reaching £22.9bn, as inflation continues to make record highs. The Treasury has been called on to provide further support in the form of pay increases to those in the public sector, which has further amplified the issue. The deficit could worsen as the Tory party chooses its new leader, with Liz Truss in full support of tax cuts for workers and businesses. Meanwhile, Rishi Sunak appears penned into his fiscally responsible rhetoric from his time as Chancellor. (Bloomberg)   


Today

European shares are lower this morning as the Nord Stream 1 gas pipeline restarts at 40% capacity, but anxiety remains around how long this could last. The Euro has strengthened ahead of the European Central Bank meeting later today while oil prices decline; WTI is trading below $100 per barrel.

Events

Bank of Japan Policy Rate (July): -0.10% (est. -0.10%)
UK Monetary Policy Committee member Huw Pill Speaks: 9:00AM
European Central Bank Monetary Policy meeting: 1:15PM
US Philadelphia Fed Manufacturing Index (July): 1:30PM
US Unemployment Claims (July 16th): 1:30PM


Interbank rates:

GBP/USD – 1.1966
GBP/EUR – 1.1717
EUR/USD – 1.0213
USD/CAD – 1.2876

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