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On Monday, at 10:00 GMT, in Germany, the Bundesbank's monthly report will be released. At 14:00 GMT, the US will publish the NAHB housing market index for July. At 23:30 GMT, Japan will present the consumer price index for June.

On Tuesday, at 01:30 GMT, in Australia, the minutes of the RBA monetary policy meeting will be published. At 06:00 GMT, Switzerland will announce a change in the foreign trade balance for June. Also at 06:00 GMT in Germany, the producer price index for June will be released. At 08:00 GMT, the eurozone will report on the change in the ECB's balance of payments balance for May. At 12:30 GMT, the United States will announce changes in building permits and the housing starts for June. At 23:50 GMT, in Japan, the minutes of the Bank of Japan meeting will be released.

On Wednesday, at 00:30 GMT, Australia will present the index of leading economic indicators from MI for June. At 01:30 GMT, Australia will report on the change in retail trade volume for June. At 06:00 GMT, Britain will announce a change in the net amount of borrowed funds of the public sector for June. At 12:30 GMT, Canada will release the new home price index for June. At 14:30 GMT, the US will report on the change in oil reserves according to the Ministry of Energy.

On Thursday, at 01:30 GMT, Australia will announce a change in the balance of foreign trade for June. At 10:00 GMT, in Britain, the CBI industrial order books balance for July will be released. At 11:45 GMT, in the eurozone, the ECB interest rate decision will be published, and at 12:30 GMT, the ECB press conference will be held. Also at 12:30 GMT, the United States will announce a change in the number of initial applications for unemployment benefits. At 14:00 GMT, the eurozone will present an indicator of consumer confidence for July, and the US will release an index of leading indicators and report on the change in existing home sales for June. At 23:01 GMT, Britain will publish the GfK consumer confidence indicator for July.

On Friday, at 06:00 GMT, Britain will announce a change in the volume of retail trade for June. Then the focus will be on the indices of business activity in the manufacturing sector and the service sector for July: France will report at 07:15 GMT, Germany at 07:30 GMT, the eurozone at 08:00 GMT, and Britain at 08:30 GMT. At 12:30 GMT, Canada will report a change in retail sales for May. At 13:45 GMT, the US will present the index of business activity in the manufacturing sector and the PMI index for the services sector for July. At 17:00 GMT, in the United States, the Baker Hughes report on the number of active oil drilling rigs will be released.

James Knightley, ING's Chief International Economist, discusses June U.S. retail sales data.

"US retail sales rose 0.6% month-on-month in June, a much better outcome than the 0.4% fall the surveys of economists were pointing too. There were downward revisions to May’s growth figure (-1.7% versus the -1.3% rate initially reported), but June’s better growth more than offsets this."

"Vehicle sales were a drag, but not by as much as feared. They declined 2% MoM in value terms, which seems a little odd given unit sales of 15.4mn versus 17.0mn in May."

"The appetite to keep spending was clearly seen in other components with sales excluding vehicles rising 1.3% versus expectations of a 0.4% gain. May’s growth figure was revise down by two tenths of a percentage point, but today’s report is clearly still a positive surprise. Electronics rose 3.3%, clothing was up 2.5%, eating and drinking out was up 2.3%, miscellaneous was up 3.4% and general merchandise was up 3.4%."

"This is an encouraging report that suggests consumer spending momentum remains strong. Moreover, retail sales is typically “only” 40-45% of total consumer spending, which in turn is usually around 65-70% of GDP. Clearly it is a very important component of overall economic activity, but with the economy re-opening there are a greater number of options on which to spend money. We will increasingly see a rebalancing of consumers’ total spend away from "things" that are picked up in retail sales, towards "experiences", such as travel, entertainment and leisure, which are not."

The Commerce Department announced on Friday that business inventories increased 0.5 percent m-o-m in May, following a revised 0.1 percent m-o-m gain in April (originally a 0.2 percent m-o-m fall).

That was in line with economists’ forecast for a 0.5 percent m-o-m advance.

According to the report, inventories at wholesalers climbed 1.3 percent m-o-m, while that at manufacturers rose 0.9 percent m-o-m. At the same time, stocks at retailers declined 0.8 percent m-o-m, while

In y-o-y terms, business inventories surged 4.5 percent in May.

A report from the University of Michigan revealed on Friday the preliminary reading for the Reuters/Michigan index of consumer sentiment plunged 5.5 percent m-o-m to 80.8 in early July. This was the lowest reading since February.

Economists had expected the index would increase to 86.5 this month from June’s final reading of 85.5.

According to the report, the index of current U.S. economic conditions declined 4.6 percent m-o-m to 84.5 in July from 88.6 in the previous month. Meanwhile, the index of consumer expectations tumbled 6.1 percent m-o-m to 78.4 this month from 83.5 in June.

According to Surveys of Consumers chief economist, Richard Curtin, the July drop in consumer sentiment was largely due to less favorable prospects for the U.S. economy. “This decline was caused by a misjudgement by consumers in the pace that the economy would recover as the pandemic eased,” he said. “This involved both underestimating the economy's ability to reactivate supply lines and restore jobs, and the resulting impact on inflation. Rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern.”

FXStreet notes that GBP/USD holds steady near 1.3815-20 region. Economists at ING suggest that cable is set to be capped next week and could challenge the 1.3750 mark in case of a dovish European Central Bank (ECB).

“While we expect EUR/GBP to remain range-bound in the 0.85-0.86 area, the downside risks to EUR/USD next week means that GBP/USD should not gain much. If anything, the risks are skewed to GBP/USD re-testing the 1.3750 level if the ECB strikes a dovish tone. The 200-day moving average of 1.3690 should prove a strong support level on the downside.”

“We have seen a shift in the communication from some of the BoE officials with MPC member Saunders and Deputy Governor Ramsden both indicating that the need to taper asset purchases may come earlier than expected. However, the impact on GBP was limited, partly because the next step in the eventual policy normalisation process (rate hikes) remains still some way off.”

U.S. stock-index futures rose on Friday, as data showed a surprise advance in the U.S. retail sales in June. Optimism, however, remained tempered by concerns about a slower global recovery, being undermined by the highly infectious Delta coronavirus variant and the reintroduction of restrictions.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Salesforce (CRM) assumed with a Buy at Stifel; target $295

Dow (DOW) downgraded to Underperform from Neutral at BofA Securities; target lowered to $68

Alcoa (AA) upgraded to Buy from Neutral at Citigroup; target $52

The Commerce Department reported on Friday the sales at U.S. retailers went up 0.6 percent m-o-m in June, following a revised 1.7 percent m-o-m fall in May (originally a 1.3 percent m-o-m decrease). 

Economists had expected total sales would drop 0.4 percent m-o-m in June.

According to the report, sales at electronics and appliance stores (+3.3 percent m-o-m), clothing and accessories stores (+2.6 percent m-o-m), gasoline stations (+2.5 percent m-o-m) and food services and drinking places (+2.3 percent m-o-m) recorded the biggest increases in June. These gains, however, were partially offset by declines in sales at motor vehicle and parts dealers (-2.0 percent m-o-m), furniture stores (-3.6 percent m-o-m) and building materials and garden equipment and supplies dealers (-1.6 percent m-o-m).

Excluding auto, retail sales jumped 1.3 percent m-o-m in June after a revised 0.9 percent m-o-m decline in the previous month (originally a 0.7 percent m-o-m decrease), being much better than economists’ forecast of a 0.4 percent m-o-m gain.

Meanwhile, closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, and are used in GDP calculations, increased 1.1 percent m-o-m in June after a revised 1.4 percent m-o-m decline in May (originally a 0.7 percent m-o-m drop).

In y-o-y terms, the U.S. retail sales surged 18.0 percent in June after a revised 27.6 percent jump in the previous month (originally a 28.1 percent climb).

The Canada Mortgage and Housing Corp. (CMHC) reported on Friday the seasonally adjusted annual rate of housing starts was at 282,070 units in June, down 1.5 percent from an upwardly revised 286,296 units in May (originally 275,916 units).

Economists had forecast an annual pace of 270,000 for June.

According to the report, urban starts declined by 1.8 percent m-o-m last month to 251,190 units, as single-detached urban starts plunged 8.5 percent m-o-m 60,105 units, while multiple urban starts rose by 0.6 percent m-o-m to 191,085 units. At the same time, rural starts were estimated at a seasonally adjusted annual rate of 30,880 units

USD advanced against most of its major rivals in the European session on Friday as concerns about a slower global recovery, being undermined by the highly infectious Delta coronavirus variant and the reintroduction of restrictions, boosted demand for safe-haven U.S. currency.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged up 0.07% to 92.69.

COVID infections are surging around the world, with the Delta variant accounting for the majority of new cases in many major economies. This caused investors to worry that the containment measures could be reinstated, triggering a stall of the economic recovery. 

USD appreciation came despite the Federal Reserve Chairman Powell’s latest reassurances that the U.S. central bank would not react to the recent spike in inflation and would continue to provide hefty support to the U.S. economy.

FXStreet notes that June’s better-than-expected economic data from China are unlikely to allay fears of fading growth momentum. And this could increase downward pressure on iron ore prices. Still, strategists at ANZ Bank do not see a sharp correction in the short-term because the market is still tight.

“Chinese steel demand started the year strongly, with production volumes in January-May up 13% YoY. But momentum has started to turn. Auto sales fell in June. Infrastructure investment has been contracting YoY, and property sector growth has softened in recent months.”

“Demand outside China is expected to offset some of that weakness there. And subdued growth in supply should keep the iron market relatively tight. Prices should trend lower in H2 2021, but the downside will be limited. We maintain our 0–3-month target of $185/t."

FXStreet reports that FX Strategists at UOB Group suggest that AUD/USD risks a deeper pullback on a close below the 0.7400 mark.

24-hour view: “Our expectation for AUD to ‘trade sideways between 0.7450 and 0.7500’ was incorrect as it rose to 0.7488 before plummeting to 0.7412. The rapid drop appears to be running ahead of itself but there is scope for AUD to dip below the major support at 0.7400. In view of the oversold conditions, AUD is unlikely to able to maintain a foothold below this level (next support is at 0.7380).”

Next 1-3 weeks: “Two days ago (14 Jul, spot at 0.7440), we highlighted that AUD ‘could trade within a 0.7400/0.7500 range’. We added, ‘the bias still appears to be tilted to the downside but AUD has to close below 0.7400 before a sustained decline can be expected’. There is no change in our view for now even though the prospect for AUD to move clearly below 0.7400 has increased.”

FXStreet notes that the recent spate of hawkish comments from the Bank of England (BoE) has turned the August MPC into a "live" meeting. Economists at TD Securities think expectations for a possible end to QE should provide GBP with a supportive tailwind over the next several weeks.

“We've seen some rather hawkish BoE comments over the last 24 hours, which has seen markets pull forward their expectations for BoE rate hikes. We have at least two MPC members who see the BoE's forward guidance conditions around tightening to have been essentially met already, which raises the risks of QE being curtailed early at the August meeting, and rate hikes beginning earlier than our current May 2023 forecast.”

“Expectations for a possible end to QE next month should provide GBP with a supportive tailwind over the next several weeks.”

“With the Fed Chair reinforcing the "patient" stance of the FOMC this week, we think cable has some scope to rebound from some of its recent weakness. Indeed, real yield differentials have turned higher since the start of the month.”

“At this stage, we would be fairly surprised to see cable trade below early-July trough at 1.3733 without a very good reason for doing so during the current market cycle. There, we would expect bids to emerge between the 200-DMA (1.3693) and 1.3671.”

“We think cable is likely to drift toward the upper end of recent ranges at 1.4250 in the run up to 5 August. Initial resistance is likely to be seen around the recent range tops (1.3910), while the 100-DMA currently stands at 1.3937. Above that, we think the next major target will be the 1.4000/10 zone ahead of 1.4085.”

FXStreet reports that in the opinion of FX Strategists at UOB Group, EUR/USD remains poised to extend the 1.1770-1.1895 range for the time being.

24-hour view: “We highlighted yesterday that ‘the rapid rebound appears to be running ahead of itself and EUR is unlikely to strengthen much further’ and we expected EUR to ‘trade sideways between 1.1800 and 1.1870’. Our view was not wrong even though EUR traded within a narrower range than expected (1.1794/1.1850). The underlying tone has weakened somewhat and there is room for EUR to edge lower but a break of the major support at 1.1770 is unlikely.”

Next 1-3 weeks: “Our update from yesterday (15 Jul, spot at 1.1835) still stands. As highlighted, EUR is not ready to head lower just yet. From here, EUR is likely trade between 1.1770 and 1.1895 for a period of time. Looking ahead, a daily closing below 1.1770 would suggest that EUR is ready to head towards 1.1700. The prospect for EUR to move to 1.1700 is not high for now but it would remain intact as long as EUR does not move above 1.1895.”

Alcoa (AA) reported Q2 FY 2021 earnings of $1.49 per share (versus -$0.02 per share in Q2 FY 2020), beating analysts’ consensus estimate of $1.31 per share.

The company’s quarterly revenues amounted to $2.833 bln (+31.9% y/y), beating analysts’ consensus estimate of $2.635 bln.

AA rose to $34.70 (+0.46%) in pre-market trading.

FXStreet reports that Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, maintains a negative bias for USD/JPY. The focus is on the July low at 109.54 - a break below here would open the path to the downside.

“USD/JPY’s recent bounce failed along the breached 2021 uptrend line, the outlook stays negative.”

“Attention is currently at the July low at 109.54. Failure here would put the 108.56 late May low and the 107.48 April low back on the map.” 

“Resistance above this week’s high at 110.70 comes in at the 110.97 March peak and also at the 111.11 June 24.”

FXStreet reports that economist at UOB Group Ho Woei Chen, CFA, assesses the latest set of Chinese data releases.

“China’s 2Q21 GDP growth was marginally below expectation at 7.9% y/y as it moderated from 18.3% y/y in 1Q21 but underlying momentum has remained fairly strong at 1.3% q/q, Overall, the economy grew by 12.7% y/y in 1H21.”

“June economic indicators showed growth in retail sales, industrial production (IP) and urban fixed asset investment (FAI) slowing but were all above expectations. The month-on-month growth for these indicators have also kept up with gains in May, suggesting that the outlook has remained largely stable.”

“China’s GDP growth rate will continue to normalise in the coming quarters as the favourable base effect diminishes. We maintain our GDP growth forecast for China at 9.1% this year, which factors in further moderation in the headline growth rate to around 6.0% in 2H21.”

According to the report from  Eurostat, the first estimate for euro area exports of goods to the rest of the world in May 2021 was €188.2 billion, an increase of 31.9% compared with May 2020 (€142.7 bn), a month which had been heavily affected by the COVID-19 containment measures widely introduced by the Member States. Imports from the rest of the world stood at €180.7 bn, a rise of 35.2% compared with May 2020 (€133.7 bn). As a result, the euro area recorded a €7.5 bn surplus in trade in goods with the rest of the world in May 2021, compared with +€8.9 bn in May 2020. Intra-euro area trade rose to €181.5 bn in May 2021, up by 45.4% compared with May 2020.

In January to May 2021, euro area exports of goods to the rest of the world rose to €957.9 bn (an increase of 13.3% compared with January-May 2020), and imports rose to €878.2 bn (an increase of 12.7% compared with January-May 2020). As a result the euro area recorded a surplus of €79.7 bn, compared with +€66.1 bn in January May 2020. Intra-euro area trade rose to €867.6 bn in January-May 2021, up by 20.5% compared with January-May 2020.

According to the report from Eurostat, the euro area annual inflation rate was 1.9% in June 2021, down from 2.0% in May. A year earlier, the rate was 0.3%. European Union annual inflation was 2.2% in June 2021, down from 2.3% in May. A year earlier, the rate was 0.8%.

The lowest annual rates were registered in Portugal (-0.6%), Malta (0.2%) and Greece (0.6%). The highest annual rates were recorded in Hungary (5.3%), Poland (4.1%) and Estonia (3.7%). Compared with May, annual inflation fell in twelve Member States, remained stable in four and rose in eleven.

In June, the highest contribution to the annual euro area inflation rate came from energy (+1.16 percentage points, pp), followed by non energy industrial goods (+0.31 pp), services (+0.28 pp) and food, alcohol & tobacco (+0.15 pp).

FXStreet reports that economists at Danske Bank discuss EUR/CHF prospects.

“We have revised our EUR/CHF forecasts slightly lower. We still see a case for higher US real rates, in step with the Fed turning more hawkish, which should lift EUR/CHF. We now forecast EUR/CHF will trade at 1.11 in 12M (down from 1.13).”

“The key joker for the pair is if global macro becomes so good in Europe that markets start talking about ECB rate hikes. Today, such a scenario is not in play. A setback in risk sentiment is another joker.”

Bloomberg reports that New Zealand inflation surged in the second quarter, breaching the central bank’s target range for the first time in 10 years and fueling bets it will start raising interest rates as soon as next month.

The annual inflation rate jumped to 3.3%, more than double its first-quarter reading of 1.5% and the fastest pace since 2011, Statistics New Zealand said. Economists expected 2.7%.

New Zealand’s economy is running hot and stoking inflation, as strong demand allows companies to pass on higher costs and a labor shortage threatens to drive up wages. The Reserve Bank, which seeks to keep inflation around the midpoint of a 1-3% target band, this week unexpectedly announced an end to quantitative easing bond purchases, a likely pre-cursor to rate rises.

Westpac New Zealand economists are now predicting quarter-point hikes in August, October and November.

Consumer prices fell in the second quarter of 2020, accentuating their annual increase this year, and some price pressures stemming from pandemic-disrupted supply chains are expected to be transitory. Still, with strong consumer demand giving firms scope to raise prices, faster inflation could become entrenched.

Reuters reports that U.S. Treasury Secretary Janet Yellen expressed concerns about housing affordability and said she expected several more months of high inflation readings, but it remained transitory, adding that the Fed was doing a good job under Chair Jerome Powell.

Yellen said the run-up in U.S. housing prices amid low interest rates and strong demand did not carry the same risks associated with the housing crash of 2008 as lending was being done to creditworthy borrowers.

"It's a very different phenomenon but I do worry about affordability and the pressures, higher housing prices will create for families that are first time homebuyers," Yellen said.

She added that Congress will be considering plans by the Biden administration to boost the supply of affordable housing.

Regarding elevated inflation data, she said she views it as transitory.

"I think we will have several more months of rapid inflation so I'm not saying that this is a one-month phenomenon. But I think over the medium term, we'll see inflation decline back to a normal level. But of course we have to keep a careful eye on it."

FXStreet reports that analysts at Danske Bank remain bullish on the pound, as they are still more upbeat on the UK than on the euro-area.

“We expect the UK recovery to continue in H2. The historical relationship between new cases and hospitalisations has weakened significantly due to the vaccines and the UK is going to re-open fully on 19 July. Inflation has been higher than anticipated in recent months supporting our view that the Bank of England will tighten monetary policy earlier than the ECB. We still expect EUR/GBP will trade lower in coming months. We also think a more hawkish Fed and BoE will support GBP. We target 0.83 in 12M.” 

During today's Asian trading, the US dollar was trading steadily against major currencies, while investors continued to analyze the comments of Federal Reserve Chairman Jerome Powell. Speaking at the US Senate Banking Committee on Thursday, he made it clear that the Federal Reserve does not intend to rush to curtail incentives and still considers the increase in inflationary pressure in the country temporary.

The acceleration of inflation, according to him, is concentrated in a limited range of sectors, including cars, as well as air transportation. The dynamics of prices in the United States is "unique", and the leadership of the Federal Reserve is closely monitoring it to understand whether its opinion about a temporary acceleration of inflation is correct, or inflationary pressure will persist for an extended period, Powell said.

The yen fell slightly. Meanwhile, the Bank of Japan does not expect that inflation in Japan will rise to its 2% target in the next three years. According to the new forecast of the Bank of Japan, inflation will be 0.6% in the current fiscal year and will increase to 0.9% and 1%, respectively, in the next two financial years. Earlier, the regulator predicted inflation of 0.1% for 2021, 0.8% for 2022 and 1% for 2023. The Bank of Japan kept the key parameters of monetary policy unchanged following the results of the two-day meeting that ended on Friday. The short-term interest rate on deposits of commercial banks in the Central Bank is left at the level of -0.1% per annum, the target yield of ten-year government bonds is about zero.

The ICE index, which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell by 0.01%.

According to the report from the European Automobile Manufacturers' Association (ACEA), in June 2021, passenger car registrations in the European Union increased again (+10.4%) compared to the same month last year, albeit at a more modest rate than in previous months. Looking at the major EU car markets, Germany posted the biggest gain with a 24.5% increase, followed by Spain (+17.1%) and Italy (+12.6%). In France, by contrast, passenger car sales contracted (-14.7%) in June.

Over the first half of 2021, EU demand for new cars grew by 25.2% to reach almost 5.4 million units registered in total. However, this is still 1.5 million units below the pre-COVID volume recorded over the first six months of 2019. The region’s 27 markets posted rather similar results so far this year, with strong year-on-year gains seen in most countries, including the four major ones: Italy (+51.4%), Spain (+34.4%), France (+28.9%) and Germany (+14.9%).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1931 (1372)

$1.1899 (1732)

$1.1873 (128)

Price at time of writing this review: $1.1808

Support levels (open interest**, contracts):

$1.1747 (2020)

$1.1716 (5548)

$1.1679 (10543)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date August, 6 is 60448 contracts (according to data from July, 15) with the maximum number of contracts with strike price $1,1700 (10543);

GBP/USD

$1.3952 (1033)

$1.3922 (709)

$1.3896 (319)

Price at time of writing this review: $1.3820

Support levels (open interest**, contracts):

$1.3760 (815)

$1.3716 (676)

$1.3687 (908)

Comments:

- Overall open interest on the CALL options with the expiration date August, 6 is 10749 contracts, with the maximum number of contracts with strike price $1,4000 (1395);

- Overall open interest on the PUT options with the expiration date August, 6 is 16021 contracts, with the maximum number of contracts with strike price $1,3950 (1618);

- The ratio of PUT/CALL was 1.49 versus 1.47 from the previous trading day according to data from July, 15

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

FXStreet reports that Paul Bloxham, HSBC Chief Economist for Australia, said that Australia’s economy is set to stagnate in the second half of the year amid the rapid of highly contagious Delta covid strain. 

“Even before the Sydney outbreak we had expected Australia’s growth to slow from its recent rapid growth rates, as population growth has stalled due to the closed border and as the fiscal impulse fades.” 

“Expect gross domestic product will drop 0.3% in the current quarter and rise 0.3% in the final three months.”

“The economy will then bounce back next year, though “the other headwinds to growth in 2022, including the only slowly re-opening border and tensions with China, are expected to remain.”

CNBC reports that Covid-19 infections are surging in several major Southeast Asian economies, and that has led Goldman Sachs to cut its 2021 growth forecasts for most of the region.

Renewed virus surges and tighter restrictions are likely to “weigh significantly more” on growth in the second half of 2021 than previously thought, the economists said.

Goldman slashed its growth forecasts by more than 100 basis points for Indonesia, Malaysia and Philippines. Singapore and Thailand saw a smaller cut by the bank.

The rapid climb in Covid infections across Southeast Asia has come as vaccination progress in the region — except for Singapore — has lagged many countries such as the U.S. and the U.K.

Singapore has one of the fastest vaccination rates globally, with over 41% of its population fully inoculated, according to the latest data compiled by online statistics portal Our World in Data. But the rest of the region is much slower.

Singapore, which tightened social-distancing measures in early May, started to ease restrictions last month. Goldman economists predicted that Malaysia will be the next to follow suit in the fourth quarter, while the other Southeast Asian economies will only do so in the first half of 2022.

Goldman said stronger global growth will benefit trade-oriented economies such as Singapore and Malaysia the most. Malaysia, which is a net commodity exporter, is also likely to gain from higher commodity prices, the bank said.

RTTNews reports that the Bank of Japan decided to maintain its monetary stimulus unchanged. The bank also lowered its near-term growth outlook citing the impact of the coronavirus pandemic and raised its fiscal 2021 inflation forecast.

The board voted 8-1, to hold the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank will continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

The BoJ provided a preliminary outline for a new-funding programme to support efforts in fields related to climate change. The bank plans to launch the measure this year and to continue until March 2031.

The bank downgraded its near-term growth projections. The economy is forecast to expand 3.8 percent in the fiscal 2021 instead of 4 percent estimated in April.

However, the outlook for the fiscal 2022 was lifted to 2.7 percent from 2.4 percent and the estimate for the fiscal 2023 was retained at 1.3 percent.

Citing higher energy prices, the bank expects inflation to rise to 0.6 percent in the fiscal 2021 instead of 0.1 percent projected previously.