Greece gives up the spotlight for a day with today’s main focus for traders squarely on the US FOMC meeting. Traders are primarily looking for an indication of when the central bank could start raising interest rates. At the start of the year, many had thought this could have been the liftoff meeting but a soft Q1 pushed the timetable back and no increase is expected this time. With the US economy rebounding in the spring, it appears likely that the FOMC may leave the door open to raising rates at any meeting going forward depending on data. As was the case in March, however, the member projections may be more important. Back in March, cuts to FOMC member projections for GDP and the fed funds rate took a June liftoff off the table. Another round of cuts this time would mean liftoff being pushed back past September. Raising forecasts would suggest a July liftoff while no change would leave the door open to a September first hike. Forecasts for the Fed funds rate also could be significant as they would suggest how many increases members expect to see this year. A main cluster around 0.75% suggests 2 hikes which would suggest a September or October start. For reference, here is the Fed Funds projections from the March meeting. Source: www.federalreserve.gov The more increases members expect, the earlier they would need to start and vice versa. A hawkish Fed (sooner and more rate hikes) could boost USD and sink stocks while a dovish Fed could boost stocks and put pressure on USD. Heading into today’s FOMC meeting, US stocks have continued on their upward course from yesterday while European indices have resumed their downtrends with Grexit fears continuing to weigh on the Eurozone. EUR is steady today but some capital appears to be going into CHF. With JPY and gold down on the day, however, defensive flows still don’t appear to be widespread. Crude oil is having an up day within its sideways ranges. WTI has regained $60 while Brent remains short of $65. NOK and CAD are trading higher against USD in tandem with the oil gains. GBP is having another strong day today. There were no surprises in Bank of England minutes but with the central bank expressing concerns about inflation combined with much higher than expected UK wage growth keep the MPC on course to start raising interest rates next year, perhaps sooner depending on what happens to inflation and when the Fed starts raising rates. Corporate News There are no major corporate announcements this morning. Economic News Economic reports released overnight and this morning include: UK jobless claims (6.5K) vs street (13.5K) UK 3M employment change 114K vs street 190K UK average weekly earnings 2.7% vs street 2.1% UK unemployment rate 5.5% as expected UK Bank of England minutes 9-0 in favour on maintaining interest rate and QE target Sweden consumer confidence 97.9 vs street 99.4 Sweden manufacturing conf 101.3 vs street 100.6 Eurozone construction output 0.0% vs previous (2.7%) Eurozone consumer prices 0.3% as expected Eurozone core CPI 0.9% as expected Japan trade balance (¥216B) vs street (¥258B) Australia leading index (0.1%) vs previous 0.1% Singapore electronic exports (2.5%) vs street (2.6%) Upcoming significant announcements include: 10:30 am EDT US crude oil inventories street (1.1 mbbls) 2:00 pm EDT US FOMC interest rate 0.25% no change expected 2:00 pm EDT US FOMC member projections 2:30 pm EDT US FOMC Chair Yellen press conference CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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