Noor Trends News, Technical Analysis, Educational Tools and Recommendations
US President Joe Biden plotted inflation-fighting strategy, on Tuesday, during his meeting with the Fed Chair Jerome Powell. Biden reportedly focused on relentlessly surging prices, with the destiny of the US economy and his own political prospects increasingly dependent on the actions of the government’s central bank. Biden’s endorsement of the Fed’s policies now grants Powell important political cover for a new round of sharp interest rate hikes intended to contain higher prices. The higher rates could cause layoffs, raise the unemployment rate and even tip the economy into recession.
The US dollar appreciated during the first half of the day but gave up during the US session. The EUR/USD pair trades around 1.0730, while GBP/USD stands around 1.2600.
The AUD/USD pair eased at the end of the day, posting modest losses as per trading in the 0.7170 price zone. The Canadian dollar appreciated alongside oil, with USD/CAD down to 1.2640.
The USD/JPY pair advanced together with US Treasury yields, trading near 128.60, but USD/CHF saw little action and is currently at 0.9590.
Gold was unable to take advantage of the dismal mood and finished the day in the red below $1,840 per ounce.
Economic Data
EU inflation soared to 8.1% YoY record high in May, according to initial estimates to accelerate concerns about the future of major economies. Asian, European as well as US stocks edged lower. Wall Street aimed to trim early losses but gave up prior of Tuesday’s close and ended also in the red territory.
The US calendar revealed the Consumer Confidence for May, which rose by 106.4, better than the 103.9 expected. The data has also revealed that inflation expectations for one year are at 7.4%, lower than April’s 7.5%.
Housing data was mixed but near the estimations, while the Fed Regional banks continued releasing their Manufacturing Indexes ahead of June’s 1 ISM Manufacturing PMI. Chicago’s PMI for May rose by 60.3, higher than the 55 expected, but the Dallas Fed Index contracted to -7.3, lower than April’s reading.
Expectations that mortgage rates would move even higher, as the Fed combats inflation may have fueled buyers into action in March. The average rate on the 30-year mortgage increased from 3.76% at the start of March to 4.67% at the end of the month. The rate hit 5.3% in mid-May.
Other Developments
EU representatives reached a deal over the sixth package of sanctions on Russia. They agreed to ban 90% of the country’s oil imports by the end of the year. Charles Michel, president of the European Council, indicated that the move could beat 75% of Russian oil imports with immediate effect.
EU leaders also agreed to provide Ukraine with a €9 billion tranche of assistance to support the war-torn country’s economy.
Sanctions include an asset freeze and travel ban on certain individuals and excluding the Russian biggest bank, Sberbank, from the SWIFT system.
The embargo covers petroleum and derivatives brought in by sea, allowing a temporary exemption for imports delivered by pipeline.
Crude oil prices soared at the start of the day but were sharply down during North American trading hours. Crude was impacted by news indicating that OPEC members are considering to exempt Russia from their oil production deal. WTI traded as high as $119.96 a barrel but settled at around $115.20.
The day will start with Australia releasing the Q1 Gross Domestic Product and the May AIG Manufacturing PMI. Disappointing readings could unleash risk aversion after poor Chinese data released early Tuesday.
Also Read:
