Olivia

The ECB is likely to keep key rates unchanged while hinting at a July lift-off. Details on the pace of the rate increases will rock the euro. The ECB is set to confirm an end of its QE program in Q3, economic projections closely eyed. The European Central Bank’s (ECB) June 9 monetary policy decision is likely to be a highly significant one, as the central bank is seen signaling its first-rate hike in over a decade. Increasing signs of inflation broadening out in the old continent have compelled the ECB to prepare for a lift-off sooner than previously expected. ECB rate hike forecasts hold the key The ECB is unanimously expected to hold its benchmark deposit rate at -0.50% when it meets this Thursday to decide on its monetary policy. Although the central bank could announce an end of its regular asset purchase programme (APP) on July 1. Despite being the laggards of the central banks to embark on the tightening cycle, ECB President Christine Lagarde has well telegraphed the upcoming rate hike track. A clear signal for a July lift-off will be on the table, which will likely move the current deposit rate for the first time since 2014.… Read More »ECB Preview: Laying groundwork for rate hikes but EUR/USD could still fall

Outlook: Today is as slow a data day as it gets– weekly MBA mortgage applications, April final wholesale inventories, and the Energy Dept oil inventories.  Watch for made-up outrages. The Atlanta Fed GDPNow was a disappointing 0.9% for Q2, down from 1.3% on June 1, again on worsening in consumer spending and private investment. This points to recession, while the financial press has turned a corner to stagflation, according to a WSJ headline. This is probably because TreasSec Yellen admitted (again) she missed the rise in inflation and yes, it can persist for longer than we think. The US will be raising its forecast from 4.7% to something higher now we have seen the whites of 8% eyes. Meanwhile, as noted above, the World Bank is still focused on recession. The World Bank predicts global growth to slump to 2.9% in 2022 from 5.7% in 2021, significantly lower than 4.1% in Jan. The US will slow to 2.5% in 2022, down by 1.2% from the earlier forecast. “New U.S. inflation data, to be released Friday, is expected by economists to show the annual rate holding steady at 8.3% in May, near a 40-year high.” The other data of note yesterday… Read More »The World Bank predicts global growth to slump to 2.9% in 2022

EUR/USD – 1.0696 Euro's selloff from last Mon's 1-month peak at 1.0786 to as low as 1.0628 (Wed) suggests upmove from May's fresh 5-year bottom at 1.0350 has made a top there and despite strong rebound to 1.0764 Fri, subsequent retreat to 1.0653 in New York Tue and then rebound would yield range trading before prospect of another fall, below 1.0653 would yield 1.0628. On the upside, only a daily close above 1.0751 would risk stronger gain towards 1.0764 but 1.0786 should hold initially. Data to be released on Wednesday Japan current account, trade balance, GDP, eco watchers current, eco watchers outlook. Swiss unemployment rate, U.K. Halifax house prices, S&P construction PMI, Germany industrial output, France trade balance, imports, exports, Italy retail sales, EU employment, GDU. U.S. MBA mortgage application, wholesale inventories and wholesale sales.

Fresh Chinese covid waves and BOJ reluctance to ease may put the yen on top in June. Uncertainty about eurozone inflation and the ECB's moves could keep the euro bid. Clear indications of peak US inflation could send the dollar tumbling down.  How will the dollar, euro and yen play out in June? The month when spring makes way to summer in the northern hemisphere is busy with critical central bank decisions and the US Federal Reserve and the European Central Bank. The yen depends less on the Bank of Japan and more on China.  *Note: This content first appeared as an answer to a Premium user. Sign up and get unfettered access to our analysts and exclusive content. 1) The Japanese yen has two reasons to rise The yen may receive a boost from a fresh outbreak of covid in China, which would trigger lockdowns and a rush to the regional safe haven – the yen. Authorities in Beijing continue prioritizing their zealous zero covid policy in curbing the disease, instead of opting to vaccinate the elderly with Western mRNA vaccines.  The recent lifting of restrictions from Shanghai's factories and Beijing's closed districts came after the world's second-largest economy crushed… Read More »Summer Is Coming: How the dollar, euro and yen are set up for a volatile June

Fresh Chinese covid waves and BOJ reluctance to ease may put the yen on top in June. Uncertainty about eurozone inflation and the ECB's moves could keep the euro bid. Clear indications of peak US inflation could send the dollar tumbling down.  How will the dollar, euro and yen play out in June? The month when spring makes way to summer in the northern hemisphere is busy with critical central bank decisions and the US Federal Reserve and the European Central Bank. The yen depends less on the Bank of Japan and more on China.  *Note: This content first appeared as an answer to a Premium user. Sign up and get unfettered access to our analysts and exclusive content. 1) The Japanese yen has two reasons to rise The yen may receive a boost from a fresh outbreak of covid in China, which would trigger lockdowns and a rush to the regional safe haven – the yen. Authorities in Beijing continue prioritizing their zealous zero covid policy in curbing the disease, instead of opting to vaccinate the elderly with Western mRNA vaccines.  The recent lifting of restrictions from Shanghai's factories and Beijing's closed districts came after the world's second-largest economy crushed… Read More »Summer Is Coming: How the dollar, euro and yen are set up for a volatile June

Fresh Chinese covid waves and BOJ reluctance to ease may put the yen on top in June. Uncertainty about eurozone inflation and the ECB's moves could keep the euro bid. Clear indications of peak US inflation could send the dollar tumbling down.  How will the dollar, euro and yen play out in June? The month when spring makes way to summer in the northern hemisphere is busy with critical central bank decisions and the US Federal Reserve and the European Central Bank. The yen depends less on the Bank of Japan and more on China.  *Note: This content first appeared as an answer to a Premium user. Sign up and get unfettered access to our analysts and exclusive content. 1) The Japanese yen has two reasons to rise The yen may receive a boost from a fresh outbreak of covid in China, which would trigger lockdowns and a rush to the regional safe haven – the yen. Authorities in Beijing continue prioritizing their zealous zero covid policy in curbing the disease, instead of opting to vaccinate the elderly with Western mRNA vaccines.  The recent lifting of restrictions from Shanghai's factories and Beijing's closed districts came after the world's second-largest economy crushed… Read More »Summer Is Coming: How the dollar, euro and yen are set up for a volatile June

Fresh Chinese covid waves and BOJ reluctance to ease may put the yen on top in June. Uncertainty about eurozone inflation and the ECB's moves could keep the euro bid. Clear indications of peak US inflation could send the dollar tumbling down.  How will the dollar, euro and yen play out in June? The month when spring makes way to summer in the northern hemisphere is busy with critical central bank decisions and the US Federal Reserve and the European Central Bank. The yen depends less on the Bank of Japan and more on China.  *Note: This content first appeared as an answer to a Premium user. Sign up and get unfettered access to our analysts and exclusive content. 1) The Japanese yen has two reasons to rise The yen may receive a boost from a fresh outbreak of covid in China, which would trigger lockdowns and a rush to the regional safe haven – the yen. Authorities in Beijing continue prioritizing their zealous zero covid policy in curbing the disease, instead of opting to vaccinate the elderly with Western mRNA vaccines.  The recent lifting of restrictions from Shanghai's factories and Beijing's closed districts came after the world's second-largest economy crushed… Read More »Summer Is Coming: How the dollar, euro and yen are set up for a volatile June

Sustained USD buying exerted some pressure on EUR/USD for the third straight day. A softer risk tone, rising US bond yields continued lending support to the greenback. The downside remains cushioned ahead of the ECB and the US CPI later this week. The EUR/USD pair edged lower for the third straight day on Tuesday, though it lacked follow-through selling and remained confined in last week's broader trading range. A combination of factors assisted the US dollar to build on its recent bounce from over a one-month low, which, in turn, was seen as a key factor exerting some downward pressure on the major. The initial market optimism led by the easing of COVID-19 restrictions was overshadowed by concerns that a more aggressive move by major central banks to constrain inflation could pose challenges to global economic growth. This continued weighing on investors' sentiment and underpinned the safe-haven greenback, which drew additional support from the latest leg up in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond shot back above the 3.0% threshold for the first time in nearly four weeks amid worries about persistent inflation. Despite the prevalent USD buying interest, the… Read More »EUR/USD Analysis: Range play intact, traders await ECB and US CPI later this week

Inflation in Australia doubles wage growth, according to Q1 figures. The RBA could pull the trigger by 40 bps, as discussed in the May meeting. AUD/USD bearish potential seems limited as long as the pair stays above 0.7140. The Reserve Bank of Australia is having a monetary policy meeting on Tuesday, June 7, and is expected to hike the cash rate for a second consecutive month. In May, the central bank decided to lift the main benchmark by 0.25%, the first move in over ten years. Inflation doubles wage growth Market participants are split on whether the central bank will pull the trigger by another 25 bps or if it will go with a 40 bps upswing. In the May statement, policymakers argued that the best decision would be the latter, with a quarter-point hike priced in at the time being. Either way, the RBA is signaling it is ready to act decisively on taming inflation. Annual inflation in Australia hit 5.1% in the first quarter of the year, after posting 3.4% in the last quarter of 2021. The figure was well above the market’s expectations, one of the reasons the RBA acted swiftly. In the May statement, policymakers anticipated… Read More »Reserve Bank of Australia Preview: Rate hikes are here to stay

US stocks rallied early as improvement with China’s COVID situation, optimism that a strong labor market will help the US consumer handle the latest wave of inflation, and after a wrath of positive news.  With no US economic data releases scheduled for today and a quiet Fed due to the blackout period, US equities followed the rally that started in Asia.  With the exception of the latest Musk/Twitter drama, it was mostly positive news from corporate America, which translated to a good start for shares of Amazon, Eli Lilly, Spirit Airlines, and Didi Global.  The stock market rally couldn’t hold as Treasury yields are edged higher as expectations grow for a much more slower deceleration with pricing pressures. Friday’s inflation report will likely show that inflation is not easing just yet, but that the odds of a recession are still low.  Wall Street will need to wait for a couple more inflation reports after this one before anyone can confidently make a call as to when the Fed may alter their tightening course.  Boris Boris Johnson will remain the Conservative leader and UK prime minister.  A leadership election won’t be needed after 211 Tory MPs voted for Johnson, while 148… Read More »Surging yields cap stock rally, Boris survives confidence vote, oil softens, gold lower as yields surge