PERU: BCRP Stays on Hold as Expected, Flags El Niño Risks
- The BCRP left its reference rate unchanged at 4.25% for a tenth consecutive meeting last night, as was widely expected. The accompanying policy statement struck a similar tone, maintaining the data dependent stance and giving no explicit guidance. However, the Board did sound more cautious on El Niño risks and geopolitical tensions, which it said, “could have more persistent effects on inflation”. Although the BCRP seems set to remain on hold for now, some analysts still see risks of a hike later this year.
- On inflation, monthly variations were said to be “consistent with the inflation target range in annualised terms”. The Board added that the deviation from target of y/y inflation was mainly due to higher fuel prices and their indirect effects, and in another new addition, noted that core inflation ex-transport stood at 1.6% y/y in June, and has been below the 2% target since April 2025. Despite the noted upside risks, the Board still expects inflation to return to the target range and to stabilise around 2% over the forecast horizon, as the supply shocks dissipate.
- On activity, leading indicators continue to show “sound performance”. The committee noted that current situation indicators improved from the previous month, while expectations indicators increased “significantly”. Global risks have “moderated”, although uncertainty remains, and the Board still sees a positive outlook for global growth and notes the favourable terms of trade for Peru.
- Overall, the Board reiterated its commitment to “adopt the necessary actions to ensure the return of inflation to the target range over the forecast horizon”, dependent on new information about inflation, particularly core inflation, inflation expectations, economic activity and the duration of supply shocks. The next MPC meeting is scheduled for August 13.
- Link to BCRP policy statement Hidden PDF.
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COMMODITIES: Gold Extends Pullback Below 200-DMA, 14-Day RSI Oversold
WTI futures are trading closer to their recent lows. The trend condition remains bullish and recent weakness appears corrective. A key area of support to watch is $90.50, the 50-day EMA. The contract has traded through it, a clear breach would highlight a top and the start of a stronger correction. This would open $77.22, the Apr 17 low. Key resistance has been defined at $105.21, the May 18 high. First resistance is $97.00, the Jun 3 high. A bear theme in Gold remains intact and this week’s extension reinforces the downtrend. The metal has pierced the $4200.0 handle and a continuation lower would signal scope for a move towards the key medium-term support at $4099.2, the Mar 23 low. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Initial resistance is seen at $4478.1, the 20-day EMA.
- WTI Crude down $0.4 or -0.45% at $87.8
- Natural Gas up $0.01 or +0.45% at $3.153
- Gold spot down $92.13 or -2.16% at $4169.02
- Copper down $6.45 or -1.02% at $625.65
- Silver down $1.55 or -2.37% at $63.8196
- Platinum down $53.29 or -3.08% at $1675.21
EQUITIES: Latest E-Mini S&P Pullback Appears Corrective
Trend signals in EuroStoxx 50 futures continue to point north, highlighted by moving average studies that remain in a bull-mode position. Note that the recent pause appears to be a flag formation - a bullish continuation pattern that reinforces the bull cycle. A resumption of gains would pave the way for a climb towards 6200.00 next. Firm support lies at 5928.04, the 50-day EMA. A clear break of the average would signal scope for a stronger correction. The trend in S&P E-Minis is bullish and the latest pullback appears corrective. Yesterday’s volatile session delivered a print below support at the 50-day EMA, currently at 7290.1. The average marks a key area of support and a clear break of it would highlight a stronger reversal and scope for a deeper corrective retracement. This would open 7200.00 initially. Key resistance and the bull trigger has been defined at 7632.25, the Jun 1 high.
- Japan's NIKKEI closed lower by 1237.36 pts or -1.89% at 64179.27 and the TOPIX ended 48.51 pts lower or -1.25% at 3847.6.
- Elsewhere, in China the SHANGHAI closed lower by 16.805 pts or -0.42% at 3993.226 and the HANG SENG ended 157.94 pts lower or -0.64% at 24407.96.
- Across Europe, Germany's DAX trades lower by 99.88 pts or -0.41% at 24334.11, FTSE 100 lower by 14.33 pts or -0.14% at 10213.59, CAC 40 up 0.26 pts or +0% at 8203.69 and Euro Stoxx 50 down 16.67 pts or -0.28% at 6033.07.
- Dow Jones mini down 337 pts or -0.66% at 50569, S&P 500 mini down 56.5 pts or -0.76% at 7334.75, NASDAQ mini down 348.5 pts or -1.2% at 28757.5.
IRAN: Iranian Foreign Ministry Notes That U.S. Talks To Be Reviewed
Full details of earlier comments from Iranian Foreign Ministry spokesperson Baqaei via IRNA:
- "The continuation of the negotiation process will be reviewed considering recent developments"
- "The Foreign Ministry spokesperson, in response to IRNA's question about the latest status of negotiations to end the war between Iran and the United States, said: Considering last night's developments, we need to review the current situation. The diplomatic process does not happen in a vacuum, and to advance any diplomatic process, a minimal space is required to be able to move forward."
- "Diplomacy and the battlefield are not two separate matters; these two together are tools to protect Iran's national interests and security."
- "Wherever necessary, our armed forces respond to the enemy with power."
- "What happened last night showed that Iran's brave armed forces do not hesitate in defending the country."
- "In the field of diplomacy, the pillars of governance are fully coordinated, and wherever necessary, they will use diplomatic tools and wherever required, military force to defend the country."
