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Trade likely subdued as U.S. closed for Independence Day

Trade likely subdued as U.S. closed for Independence Day

Activity is expected to be subdued with U.S. markets closed for the Independence Day holiday, and meetings of European Central Bank and the Bank of England policy makers on Thursday.

The ECB is seen cutting interest rates to a record low on Thursday but may need to do more to satisfy financial markets which are already starting to wonder about the solidity of last week’s summit measures. A string of weak data out of the United States and Europe has spurred expectations of more stimulus from both the ECB and the Federal Reserve.

The IMF described the recovery of US economy as “tepid” and cut growth forecast for the world’s largest economy to 2.0% , warning of the risks of the eurozone crisis and uncertainties surrounding domestic policy in the run up to the election in November. It also warned that the US could return to recession next year, damaging the global recovery, if a deal is not reached to prevent large spending cuts and tax increases scheduled for next year.

According to the Bank of England, UK mortgage approvals remained subdued in May fuelling speculation that house prices will continue to soften. There were 51,098 mortgage approvals for house purchases, significantly down on the 2-year high of 58,728 seen in January. Meanwhile, consumers continue to reduce their mortgage debt amid a mood of caution regarding the future.

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