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Markets Update: The Fed Leaves Rates Unchanged, But Revises Dot Plots Higher, as ECB decides today.
Today's important market events:
[EUR] ECB Interest Rate Decision - 14:15 CEST
[USD] Core Retail Sales (MoM - May) - 14:30 CEST
[USD] Initial Jobless Claims - 14:30 CEST
[USD] Philadelphia Fed Manufacturing Index (Jun) - 14:30 CEST
[USD] Retail Sales (MoM - May) - 14:30 CEST
[EUR] ECB Press Conference - 14:45 CEST
Global Markets Roundup: 15 June 2023
The Federal Reserve left interest rates unchanged at 0.25% as expected on Wednesday. However, the central bank revised its dot plot higher, which now indicates that two more 25bp hikes are likely this year.
Fed Chair Jerome Powell distanced himself from the dot plots in the press conference, noting that projections are not a plan or a decision. He said that the Fed will continue to monitor the data and adjust policy as needed.
Stocks Mixed, APAC Stocks Higher
US stocks finished mixed on Wednesday, with the S&P 500 and Dow Jones Industrial Average both closing down slightly. However, APAC stocks traded mostly higher, with the Nikkei 225 and Hang Seng Index both closing up.
The gains in APAC markets were supported by the PBoC's decision to cut its 1-year MLF rates by 10bps. The PBoC's move was seen as a sign that China is still committed to supporting its economy.
European Equity Futures Softer European equity futures are indicative of a softer open on Thursday, with the Euro Stoxx 50 down 0.2%. This is likely due to profit-taking after the strong gains in APAC markets. USD Up, JPY Down The USD has continued to claw back yesterday's losses, while the JPY is the standout laggard across the majors amid interest rate differential flows.
Foreign Exchange The US dollar index (DXY) was firmer on Thursday, clawing back losses from the previous day. The rebound in the buck was attributed to a number of factors, including:
Cooler-than-expected PPI data: The US producer price index (PPI) for May came in below expectations, which could signal that inflation may be peaking.
Fed Chair Powell's press conference: Fed Chair Jerome Powell's press conference on Wednesday was seen as less hawkish than expected, which also supported the dollar.
In individual currency pairs, EUR/USD marginally weakened but held on to the 1.0800 level, while GBP/USD was softer after yesterday's early momentum was thwarted by resistance around the 1.2700 level. USD/JPY rose above 141.00 amid anticipation of wider future policy divergences between the Fed and the Bank of Japan (BoJ). Antipodeans were mixed with AUD/USD underpinned by strong jobs data, while NZD/USD was pressured after Q1 GDP confirmed that the New Zealand economy entered into a recession.
Fixed Income 10-year US Treasury futures remained subdued following the FOMC meeting, where the dot plots suggested that the Fed still had a total of 50 basis points (bps) to go on rate hikes. However, prices were off their lows after a less hawkish press conference from Powell, who said that projections are not a plan or decision and that they will decide meeting by meeting. Bund futures mildly retreated to beneath 133.00 ahead of today’s widely anticipated ECB rate hike. 10-year Japanese government bond (JGB) futures were choppy albeit with downside stemmed amid the Bank of Japan’s (BoJ) presence in the market for JPY 1.3 trillion of JGBs on top of its fixed-rate operations and with the central bank also kick-starting its 2-day policy meeting.
Commodities
Crude oil futures traded rangebound as participants digested the Fed's hawkish skip and weak Chinese data. Spot gold trickled lower and extended on post-FOMC lows after the greenback recouped its losses overnight. Copper futures were pressured as the latest Chinese activity data continued to underscore the nation's slow economic recovery.
Looking Ahead Highlights for Thursday include:
US IJC
Retail Sales
Industrial Production
New Zealand Manufacturing PMI
ECB Policy Announcement & Press Conference with ECB's Lagarde
Supply from Spain & France
Overall, markets are likely to remain cautious on Thursday as investors await the outcome of key economic data and central bank events.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team