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No Muss no fuss

While the ECB's guidance remains unchanged, the central bank lack of concern on the surging euro was a strong enough signal to send traders scrambling for top side EUR FX exposure.

So much frenzy in EUR FX at the moment; it's hard not to get carried away with the action.

But one thing that is crystal clear, Investors want to be long EUR and related proxies heading into the asset-purchase program (APP) taper which may be announced as early as the Jackson Hole 2017 Economic Symposium,(Aug. 24-26, 2017.).Circle Draghi's August 25th speech on the calendar as this will be a huge event so expect vol risk premium to ratchet higher as we near that date

But this move is not just about Draghi failing to express a currency view. The EUR kicked into high gear taking out 2016 high when news hit that Special Counsel Robert Mueller was looking into President Donald Trump's business transactions as part of the exploration into the Trump campaign's ties to Russia. This revelation is huge as just last week President Trump said that expanding the investigation beyond Russia would be out of bounds so with Muller broadening the Inquisition into Trump's business dealings, US political risk could move to whole new level as this foxtrot plays out.

Euro

Price action suggests US dollar selling remains the Flavour du Jour as investors were caught desperately short of euro. When it rains, it pours, so it seems for the beleaguered greenback these days which in the absence of critical primary economic data is unlikely to get a reprieve from the political lambasting the Trump administration is wearing.

Australian Dollar

The Euro is not the only game in town as the market sits tight awaiting an unblurred hawkish signal from RBA. After yesterday knee-jerk higher on last month's robust jobs performance with a +62k print in full-time employment, profit taking set in immediately as yield retraced in a blink of the eye.But I suspect Aussie longs were getting a severe case of the heebie jeebies ahead of the RBA member Guy Debelle's speech as he will be peppered with questions about the surging A$ and the market reaction to the RBA minutes

Two outcomes, Debelle does the Draghi shuffle and fails to discuss FX and policy in the same sentence, or he takes the opportunity to pare back recent moves in both yield and the currency. Either way, this could get exciting.

The Canadian dollar appreciated slightly on Thursday as comments from Mexican officials gave more details surrounding the upcoming NAFTA renegotiation talks. The loonie is higher despite a setback in oil prices. After three weeks of weekly US drawdowns energy prices lost close to 1 percent. Canadian data due on Friday could reverse the CAD rally with inflation and retail sales setbacks forecasted.

NAFTA Details Shared

Canadian and Mexican diplomats met on Wednesday to discuss their collective strategy ahead of the NAFTA first round of talks scheduled for August 16. Mexican sources revealed the plan is to hold seven rounds of talks in three week intervals. The aggressive schedule is designed to end negotiations before the Mexican presidential elections and the US midterm elections which could encumber trade talks. The Mexican ambassador to the United States has said that the possibility of the Trump administration could back out of the talks remains.

Bare US Economic Calendar

Lack of economic data in the US and the cloud of uncertainty around the Trump administration have impaired the US dollar. The U.S. Federal Reserve appears to be turning dovish after a hawkish start of the year with two rate hikes. Inflation remains weak but the central bank estimates it to be a “temporary” set back.

CAD Steady Ahead of Canadian Retail Sales and Inflation

The USD/CAD lost 0.131 in the last 24 hours. The currency pair is trading at 1.2575. The loonie is rising despite losses in energy prices as the US dollar weakness is the biggest trend in the market. The hawkish Bank of Canada (BoC) comments in June were followed by a rate hike in July and high probability of more to come before the end of the year. The CAD is closing the interest rate divergence with the USD as Canadian fundamentals have validated the actions of the central bank.

The next obstacle for the loonie will be the release of retail sales and consumer price index (CPI) data on Friday at 8:30 am EDT. The BoC faces a similar concern on soft inflation with other major central banks. Canadian inflation is expected to have slowed down by 0.1 percent last month. Retail sales are also estimated to have lost momentum by only gaining 0.3 percent and could be flat after removing the volatile auto sales.

WTI Lower Ahead of Russia Summit

The price of energy lost 0.933 on Thursday. West Texas Intermediate was trading at $46.69 in anticipation of next week’s meeting between a select group of Organization of the Petroleum Exporting Countries (OPEC) and other major producers in Russia. The group will sit down to review compliance targets and there is a possibility for further measures or changes to the current agreement that runs until March of 2018.

The meeting between OPEC and Russia to discuss compliance later this month will open the door for the next steps for energy producers. A bigger cut in production after the agreed extension is in the cards, but there are some voice of dissent as current levels are causing distress for countries who depend on oil sales to balance their budget. Rising production in Nigeria and Libya as well as a higher rig count in the US have put downward pressure on energy prices despite the efforts of the OPEC and other major producers. Political infighting could fracture the OPEC with Saudi Arabia and Iran casting doubts on how unified the group will be going forward. Compliance with the production cut agreement has been stellar, but mostly on the efforts of Saudi Arabia, which could be entering a seasonal push for higher production along with comments from other OPEC members like Ecuador and Venezuela that want to increase production to balance their country’s budget.

Market events to watch this week:

Friday, July 21
8:30 am CAD CPI m/m
8:30 am CAD Core Retail Sales m/m

Gold has posted gains in the Thursday session. In the North American session, spot gold is trading at $1246.18, up 0.46% on the day. On the release front, the ECB and Bank of Japan both held the course with their ultra-loose monetary policy. In the US, the numbers were a mixed bag. Unemployment claims dropped to 233 thousand, marking a 9-week low. The news was not as positive on the manufacturing front, as the Philly Fed Manufacturing Index slowed down to 19.5, its weakest reading since November 2016.

Gold prices have moved higher after the European and Japanese central banks announced that they would continue their accommodative monetary policy. As well, the ECB and BoJ maintained the current policy of ultra-low interest rates, at 0.00% and 0.10% respectively. With the economies in the eurozone and Japan both showing improvement, their has been pressure on policymakers to reduce stimulus. However, inflation levels in the eurozone and Japan are well below the target of 2%, and the banks have reiterated that they will not taper asset-purchases until inflation levels move higher. The ECB is expected to revisit its monetary stance at its September meeting, and if policymakers decide to tighten monetary policy, gold prices could head lower.

President Trump hasn't done very well at learning how to tango with Congress, and this week's debacle on Capitol Hill could make the gap between Trump and Republican lawmakers even harder to bridge. Trump had vowed to replace Obamacare, but his health care bill has stalled in the Senate before lawmakers even had a chance to vote on the proposal. With some conservative Republicans coming out against the bill, it's questionable if the Republicans can pass another version before Congress takes a recess in August. Trump had promised to pass a health care before the summer break, so his credibility will take another hit if he's unable to do so. Trump has been in office for six months, but has been unable to get Congress to pass any significant bills, even though the Republicans enjoy a majority in both houses of Congress. With this latest setback, there is growing skepticism as to whether Trump will be able to convince Congress to pass other key parts of his agenda – tax reform and fiscal spending. This paralysis on Capitol Hill has deepened investor pessimism about Trump's legislative agenda and is weighing on the US dollar.

The euro sent a powerful signal on Thursday as it surged to 23-month highs despite continued dovish rhetoric from Draghi. EUR was the top performer while sterling lagged. Politics are also back on the trading agenda. A new EUR trade & charts analysis was issued before the ECB press conference. Both the Arabic and English videos are posted below for subscribers.

Days like Thursday make it tough to explain currency moves but also make the underlying market dynamics clear. The ECB didn't make any meaningful changes to its statement. References to the size and duration of QE programs were unchanged and that initially sent the euro slightly lower.

Fast-forward to the press conference and a rally in the euro took hold that extended as high as 1.1658 from a low of 1.1479. Was it something Draghi said in the press conference? Hardly. He was clear the governing council was unanimous about no changes to forward guidance and he continued to preach patience.

At best there was some of the big picture optimism we warned about but it came in a small dose as he said that incoming information confirmed that the strengthening of the economy is broadening. That was balanced by a warning that underlying inflation had yet to show convincing signs of a pickup. His words were carefully chosen as to avoid any hawkish signals and a repeat of the Sintra speech fallout. He failed, nonetheless.

So while there was no clear catalyst for the gain, it is inevitable that QE will be curtailed further this year. The aggressive euro buying points to the underlying demand for EUR. It cruised through resistance at the 12-month high and finished the day with a strong bid. Ultimately, the market senses that a shift in Draghi's tone is inevitable and euro buyers have jumped into the race before the starting pistol.

At the same time, some of the EUR/USD strength Thursday also came from the other side of the trade. The US dollar sold off on a report that the Trump-Russia investigation had broadened to include his business deals. In the past, though, those type of politically-driven market moves have faded.

The Euro surged further after being initially pushed higher by remark from ECB chief Draghi that discussion should take place in the autumn, which heated his post-EB policy meeting speech, generally seen as usual dovish mantra.

Draghi said expecting inflation to rise only gradually and substantial degree of accommodation is still needed, similar wording to his speech three weeks ago.

Fresh boost for the single currency came from news about expanding Russia probe to Trump's business transactions which sent the dollar lower across the board.

The Euro enjoyed strong supports and spiked to the highest levels in over two years, hitting so far high at 1.1658.

The pair is riding on extended wave C of five-wave cycle from 1.1188 which dented its FE100% at 1.1643 and heading towards target at 1.1735 (Fibo 38.2% of 1.3992/1.0340 descend).

With daily indicators entering overbought zone, the pair may show hesitation ahead of 1.1735, with corrective easing expected on firmer bearish signals.

Tuesday's high at 1.1583 now acts as initial support, followed by rising daily Tenkan-sen which tracks the ascend for over three weeks, currently at 1.1514.

Res: 1.1658; 1.1700; 1.1735; 1.1800
Sup: 1.1600; 1.1583; 1.1556; 1.1514

The European Central Bank maintained its highly accommodative monetary policy stance at the end of its two-day meeting today, confounding expectations that it would take another baby step towards exiting from its stimulus program.

As widely expected, the ECB held its key rates and pace of asset purchases unchanged. However, following the small tweaks to the forward guidance seen at previous meetings this year, many analysts were anticipating the ECB to make further modifications to its statement by dropping its easing bias. But the ECB disappointed as it maintained its pledge that "the Governing Council stands ready to increase the programme in terms of size and/or duration".

The euro initially fell after the announcement, slipping to an intra-day low of 1.1478 against the US dollar. However, the single currency soon reversed higher after President Mario Draghi began his press conference where he repeated his recent upbeat assessment of the Eurozone economy. His remarks on inflation were not as positive and his overall tone was surprisingly dovish, but traders shrugged off Draghi's comments to drive the euro towards Tuesday's 14-month high, hitting 1.1573 dollars after the press conference ended.

Last month, Draghi had used an ECB forum in Sintra, Portugal, to signal that as the Eurozone economy improves, policy adjustment would be necessary. However, at today's press conference, Draghi was far from suggesting that policy tightening was forthcoming and instead emphasized the need to be patient.

"We need to be persistent and patient because we aren't there yet" stressed the ECB head, before adding that the Governing Council hasn't even decided on an exact date when they will begin the discussion of stimulus withdrawal. Draghi said, "We also were unanimous in communicating no change to the forward guidance and also we were unanimous in setting no precise date for when to discuss changes in the future – in other words, we simply said that our discussions should take place in the autumn".

The lack of confirmation that the September meeting would be used to announce the possible start of tapering was an unexpected development and suggests any decision could be pushed back till October. Draghi also reiterated that a substantial degree of monetary accommodation was still needed despite the "robust" recovery, as wages and underlying inflation remain subdued.

The ECB's latest stance opens the prospect that a full exit from the bond buying program is a long way off and that the central bank is in no hurry to abandon its easy monetary policy. However, looking at the reaction in forex markets, investors appear less convinced, with some analysts interpreting Draghi's words as an attempt to portray any future reduction in the size of asset purchases as mere policy adjustment rather than tapering.

The euro rallied to a near 14-month high against the dollar during the European session following ECB President Mario Draghi's speech at a news conference today. Sterling was briefly lifted against the US currency, but gave up on gains and was down on the day as the US session started. During the end of the session, forex markets reacted significantly on the back of just released news regarding Trump's links with Russia. The dollar index was down 0.60% at 94.22.

The euro had initially slipped to a two-day low against the greenback following the release of the ECB policy decision, which was kept the same. However, the eurozone currency rose towards a 14-month peak against the dollar after ECB President Mario Draghi said policymakers would discuss possible changes to its bond-buying scheme in the autumn. While Draghi said no date had been set for discussing any changes to the program, investors believed discussions in the autumn would lead to monetary tightening next year. The euro rose to as high as $1.1575 as Draghi spoke, near the 14-month highs of $1.1583 from earlier in the week and being up almost half a percent on the day. The next key event euro traders will be closely monitoring in hope for more clues is the Fed symposium in Jackson Hole (late August) at which Mario Draghi will speak this year.

The euro rallied further on the back of news that the special council is "examining a broad range of transactions involving Trump's businesses". Dollar/yen fell to 111.78 while euro/dollar rose to above the 1.16 level to last trade at 1.1630, its 23-month high, as the US session was underway.

Warm weather lured UK shoppers to splash during June, mostly on clothing that led the retail sales higher. The figure for June beat expectations to rise 0.6% month-on-month, above the 0.2% forecasted expansion and the 1.2% decline recorded in the previous month. The year-on-year number was also higher than expected and increased 2.9% versus the forecasted 2.5%. However, an official comment from UK's Trade Minister Liam Fox saying that the country could get by without a Brexit trade deal casted a cloud over the pound. This scenario, if true, could deter business activity as predicted by economists. Sterling rose against the dollar after the upbeat UK retail sales report today. Pound/dollar rose to 1.3017 immediately post the release, though it lost ground later in the session to last trade at 1.2991.

The two important economic data releases out of the US gave a mixed picture of the economy. The figure for initial jobless claims portrayed a positive image by coming in below expectations. The number of people seeking unemployment benefits fell to 233K for the week ending July 15, the lowest level in nearly five months. The figure is below the upwardly revised number for the prior week (248K). However, the Philadelphia Fed Manufacturing index for July disappointed by falling to 19.5, the lowest level since November 2016 and far below the expected level of 24 and the prior month's 27.6. The dollar rose slightly immediately after the data release, however it fell soon after. The US currency was last trading at 111.78 yen as the US session started.

Oil prices continued gaining during the European session with Brent reaching an intra-day high of $50.19 a barrel, above the key $50 level. Brent was last trading just another that level, while WTI was at $47.44, up 0.7% on the day.

Even though gold prices rose in the pre-US session on dollar weakness, it wasn't enough to offset earlier losses. The precious metal was last trading at $1,238.58 an ounce.

GBP/USD has posted slight losses in the Thursday session. In North American trade, the pair is trading at 1.2990, down 0.25% on the day. In economic news, British Retail Sales posted a gain of 0.6%, above the forecast of 0.4%. US numbers were mixed. Unemployment claims dropped to 233 thousand, marking a 9-week low. On a sour note, the Philly Fed Manufacturing Index slowed down to 19.5, its weakest reading since November 2016. On Friday, the UK releases Public Sector Net Borrowing.

There was relief in the markets as British retail sales rebounded in June. After two sharp declines in the past three months, the key indicator rebounded with a respectable gain of 0.6%. Warm weather was a key factor in the gain, as a warm June translated into stronger clothing sales. Despite the solid June release, British consumers have plenty to worry about. The reality of Brexit has arrived, as British and EU teams have sat down to negotiate a divorce which promises to be extremely complex. Inflation is at higher clip than wage growth, meaning the consumer has less purchasing power. Finally, the weak pound (a key factor behind high inflation) has meant that imports have become more expensive.

British CPI has been picking up speed in recent months, but the indicator slowed to 2.6% in June, down from 2.9% in May. This was considerably lower than the estimate of 2.9% and the first time in 2017 that inflation levels have not increased from the previous reading. The soft data eases the pressure on the BoE to raise rates in order to curb high inflation levels. Policymakers at the BoE have been at odds over raising rates – even though inflation is high, the economy has been showing signs of weakness, raising concerns that the economy does not need higher interest rates. On Tuesday, BoE Governor Mark Carney said that the main factor behind high inflation was the fall in the pound, which has dropped sharply since the Brexit vote in June 2016. The BoE hold its next policy meeting on August 4, and analysts expect the policymakers to hold the benchmark rate at 0.25%, where it has been pegged since August 2016.

Brexit negotiators from Britain and the European Union met in Brussels earlier this week, marking the start of substantive negotiations on Britain's exit from the EU. After weeks of "discussions about what to discuss", the UK agreed to the European demand that the negotiations would focus on the rights of EU citizens in the UK and Britain's bill for leaving the EU, before entering talks on a new trade agreement. Britain has presented its position on guaranteed rights for EU citizens living in the UK, but EU negotiators have said that this offer doesn't go far enough. The EU has handed Britain an exit bill of EUR 69 billion, and although the May government has agreed that it owes funds to Brussels, it certainly will counter with a much lower figure. With significant gaps between the parties on both of these issues, the negotiations promise to be difficult. Another complication is internal dissent within the May government, with senior officials at odds over a 'transition period' for Britain after leaving Brexit. Finance Minister Philip Hammond has suggested a transition period of two years, but Brexit Secretary David Davis has said he wants the UK completely out of the single market when Brexit negotiations terminate in March 2019.

• European equities started the day on a strong footing, supported by constructive earnings and dipped only temporarily during the ECB press conference. Daily gains of the Euro Stoxx 50 hover around 0.50%. American markets also opened in positive territory but gains are more limited than in Europe.
• Unsurprisingly, the ECB left its policy rate unchanged and maintains the pace of bond purchases. ECB present Draghi maintained a soft assessment. He acknowledged that the euro's strength "received some attention" and said a sudden change in financing conditions would be "the last thing the governing council wants". He also said "financing conditions remain broadly supportive to secure a sustained return of inflation rates towards our inflation aim".
• UK June Retail Sales June surprised to the upside, helped by warm weather conditions and early timing of the Muslim festival of Eid. Retail sales excluding auto fuel rose 0.9% M/M (3.0% Y/Y) while only a 0.5% rise was expected (2.5%). In the previous month, retail sales had declined by 1.5%.
• The weekly initial jobless claims in the US came in better than expected at 233K while 245k was expected, confirming healthy labour market conditions.
• The Philadelphia Fed's headline General Business Activity index declined more than 8 points from 27.6 in June to 19.5 in July. Consensus expected a smaller decline to 23. The number however still points to solid expansion. The survey also showed that price pressures moderated but price expectations for the six months to come rose.
• EU and UK negotiators ended their four-day round of talks today with little common ground found on the role of the European Court of Justice, the divorce bill or the Irish soft border. The clock is ticking on Brexit but talks on the free-trade agreement have to wait until "sufficient progress" has been made on the above mentioned issues.

Rates

Soft Draghi cannot really convince bond markets

Global core bonds moved up and down after the release of the ECB statement and during the press conference, but couldn't choose a firm direction. The statement was dovish, as the decision was unchanged from June, including the easing bias on the APP (asset purchase programme ,see below). The text of the statement was virtually unchanged and during the press conference Mario Draghi held a dovish tenure. The ECB doesn't want an unwarranted tightening of financial conditions and will eventually react if condition do tighten (easing bias). He was optimistic on the growth outlook, but doesn't see any tangible signs of a sustained upturn of underlying inflation. He said the general council was unanimously in its decision, including in having no precise date for when to decide on policy changes. The council left that deliberately open. The Committees were not charged with technical preparations for the implementation of the APP after end 2017 and he even suggested that the final discussion would not necessarily happen in September. It might be later. Despite this dovish performance, Bunds couldn't really catch a sustained bid.

The ECB kept, as expected, both its rates (repo: 0%, depo:-0.40%) and its guidance on rates unchanged. It expects rates to remain at the present level for an extended period of time and well past the horizon of the asset purchases. The ECB also confirmed the $60B/month asset purchases till at least the end of December 2017 and, contrary to about halve of the forecasters, it also kept its guidance on this point intact. "If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration."

At the time of writing, German yields fell very modestly by 0.5 (2-yr) to 2.1 bps (5-yr). The 30-year yield rose 0.4 bp. Changes on the US yield curve were limited too and range between flat (2-yr) to -2.2 bps (30-yr). On intra-EMU bond markets, peripherals benefitted from the Draghi comments. 10-yr yield spread changes versus Germany ranged from -4 bps (Portugal) to -7 bps (Italy/Spain).

Currencies

Soft Draghi not soft enough to hurt the euro

Today, the focus for global FX trading was on the ECB policy decision. The ECB left its policy unchanged, kept its commitment to extend asset purchases if needed and didn't commit on the timing of a policy reassessment. Despite this soft ECB communication, the euro rebounded during the press conference as the ECB president wasn't very worried on the recent rise of the euro. EUR/USD currently trades in the 1.1550 area. USD/JPY is little changed in the low 112 area.

The BoJ kept its policy unchanged overnight, as expected. The yen weakened slightly on the prospect that the BoJ will lag the Fed and the ECB on its way to policy normalisation. USD/JPY returned north of 112. However, changes were negligible. EUR/USD drifted lower toward the 1.15 mark as investors took partial profit on the recent rally ahead of the ECB decision.

During the morning session, trading in the major dollar cross-rate developed in wait-and-see modus as investors looked forward to the ECB policy decision and press conference.

The ECB, as expected, left its policy unchanged. The euro dropped temporary below the 1.15 mark as the ECB maintained its language that it stands ready to increase asset purchases in size and duration if the economy worsens. Sentiment changed however during Draghi's press conference. On a question regarding recent euro strength, the ECB president said that the euro repricing received some attention in the meeting but at the same time said that financing conditions remain broadly supportive. The 'objective' message from the ECB president was little changed from recent soft ECB communication but the market apparently expected that he would be more worried about the recent rise of the euro and the rise in EMU yields. This 'feeling' propelled the euro higher in the 1.15 area. EUR/USD currently trades in the 1.1555 area. The US eco data were mixed with the claims lower/better than expected and the Philly Fed index softer than expected, but the data hardly had any impact on the dollar. The fall-out from the ECB press conference had little impact on USD/JPY. The pair still trades in the low 112 area. Conclusion: the ECB president was soft, but not soft enough to weaken the euro. A decline of EUR/USD clearly needs support for a stronger dollar too.

Lack of progress in Brexit-talks weighs on sterling

Today, Brexit-noise rather than the retail sales data unexpectedly dominated the price action in sterling. UK trade secretary Fox in an interview repeated that the UK will try to secure a deal, but that it can survive without a deal. Comments from negotiators from both sides were more balanced, but couldn't hide deep differences on key issues at the end of this week's negotiations. EUR/GBP started a gradual rebound of the intraday lows in the 0.8835 area. The UK June retail sales (0.6% M/M and 2.% Y/Y) rebounded more than expected, but were not able to reverse the negative sterling sentiment. EUR/GBP soon resumed its intraday rebound to the high 0.88 area. Cable also lost about a full big figure and dropped to the 1.2950 area. This afternoon, the rebound of EUR/USD during the ECB press conference also filtered through into the major sterling cross-rates. EUR/GBP trades north of 0.89 again. Cable regained some ground in lockstep with EUR/USD and trades in the 1.2970 area.

ECB left interest rates and the QE program unchanged in July. The members also decided to keep the QE reference in the forward guidance. The central bank indicated it would continue buying assets in the market for some time and President Mario Draghi admitted that "inflation is not where we want it to be, nor where it should be" and "that's why a substantial degree of accommodative monetary policy is still needed". The single currency plunged after the dovish statement. However, it reversed to gains and jumped to a fresh 14-month high against USD after Draghi indicated that QE discussion would begin in autumn.

The central bank kept the main refi rate, the marginal lending rate and the deposit rate unchanged at 0%, 0.25% and -0.4% respectively. The central bank also affirmed that the QE program would be maintained at the monthly pace of 60B euro, which is "intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim".

At the press conference, Draghi acknowledged that the economy is experiencing "a robust recovery where we only have to wait for wages and prices to follow course". He added that "while the ongoing economic expansion provides confidence that inflation will gradually glide toward levels in line with the inflation aim, it has yet to translate into stronger inflation dynamic" and "a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up".

In the accompanying statement, ECB reiterated that "if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration". A few weeks ago, Mario unveiled that the members had discussed over the possibility of removing the forward guidance of expanding and extending QE purchases, triggering market speculations that they would do so in July.

While leaving the policies and statement unchanged, Drahi promised QE discussions to begin in autumn. However, he refused to comment whether it means the September 7 meeting.