What You Might Have Missed Yesterday in the Global Financial Markets

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Yesterday, the most important news statement was all but overlooked by markets as global traders were focused on central banks.

Yesterday in an interview, German Chancellor Angela Merkel suggested she has some doubt that the European project will work.

Also yesterday:

Bank of England policy makers may reconsider the case for an interest-rate cut after assessing the impact of new lending and liquidity measures as Europe’s debt crisis keeps pressure on them to do more to stoke growth.

Federal Reserve Chairman Ben S. Bernanke said U.S. Central bankers are capable of removing record stimulus from the financial system and raising interest rates when needed to avoid triggering inflation.

New U.S. home construction rose in June to the highest level in almost four years, indicating the residential real estate market is strengthening even as other parts of the economy cool.

China’s new home prices in June rose in the most number of cities tracked by the government in 11 months as buyer sentiment improved after the central bank cut interest rates.

The pound weakened against the euro and the dollar after Bank of England policy makers said they may reconsider the case for an interest-rate cut after assessing the impact of new measures on the economy.

The Federal Reserve said the economy expanded at a “modest to moderate” pace in June and early July, as retail sales and manufacturing cooled in some regions.

The yen advanced against most major counterparts as concern about the implementation of measures to stem Europe’s debt crisis supported demand for Japan’s currency as a haven.

Canada’s dollar appreciated against its U.S. counterpart and the euro as oil rose to the highest since May and stocks advanced, burnishing the outlook for currencies that benefit from global demand.

Treasury benchmark 10-year yields were five basis points from the record low after Federal Reserve Chairman Ben S. Bernanke said the U.S. fiscal situation is “unsustainable,” supporting demand for the safest assets.

Oil traded near the highest close in seven weeks after U.S. gasoline stockpiles unexpectedly dropped and housing starts beat estimates, signaling fuel demand may increase amid an economic recovery.

Gold traded little changed on Thursday, after two sessions of losses as U.S. Federal Reserve Chairman Ben Bernanke offered no hints on further stimulus and worries about the euro zone persisted.

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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