Yesterday, markets attention switched to the ECB as President Mario Draghi addressed markets at the ECB press conference. The Euro rallied despite Draghi’s overall dovish tone with talks of inflation and an end to asset purchases. Prior to the press conference, the ECB announced they would be keeping the interest rates on hold, saying “we are finally experiencing a robust recovery where we only have to wait for wages and prices to follow course”. The ECB mentioned that they would not want to see unwanted tightening which could slow down or jeopardise the recovery, which caused the Euro to slide slightly. However, in the press conference after, Draghi hinted the ECB might start discussing reducing QE in Autumn. This caused the Euro to rally over the course of the afternoon reaching almost a two-year high against the Dollar.
In the UK, the retail sales figure posted better than expected for the month of June. Bouncing back from the previous month’s poor -1.1%, retail sales posted 0.6%, helped by June’s warm weather which drove strong sales of household goods, clothing and shoes. These compensated for the decline in sales of food and fuel for the month. The positive reading for June has helped the overall figure for retail sales push up to 1.5% for the second quarter of the year, after a 1.4% fall in the first quarter.
Today will see a fairly quiet end to the week, with no high tier data being released from the Eurozone, UK or US. The markets will continue to digest Mario Draghi’s speech yesterday. Back in the UK, a piece of lower tier data will be released in the form of the Public Sector Net Borrowing, expected to drop to 4.3b from 6b currently.