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As US markets were closed in observance of the Juneteenth Holiday, markets have had a tranquil start to the week with no data. The American Dollar partially recovered from the enormous losses of the previous week, but it is still struggling as Gold stays around $1,950 per troy ounce and the USD/JPY crosses the 142.00 level.
Key Developments:
In negotiations intended to normalise relations between the two nations, US Secretary of State Antony Blinken met with Chinese President Xi Jinping over the weekend. On Monday, he said they had made “good progress,” but no significant progress was made.
A further increase in interest rates looks fair for July, according to ECB Member of the Executive Board Philip R. Lane, while the decision for September will be based on data. He expressed confidence, predicting that inflation would drop to the central bank’s 2% objective very rapidly. While this was going on, Isabel Schnabel, a different ECB Executive Board member, raised alarm over the central bank’s underestimation of inflation and said the interest rate path should have been sharper. The daily low for the EUR/USD was 1.0920.
GBP/USD hovers around 1.2780, not far from the 2023 high posted last week at 1.2848, as investors expect the Bank of England (BoE) to hike its benchmark rate by 25 basis points later this week while leaving the door open for additional hikes. UK interest rate swaps show a greater than 50% chance of BoE rates reaching a terminal rate of 6% by February 2024.
What To Watch In Next Trading Sessions:
The Reserve Bank of Australia (RBA) will release the Minutes of its latest meeting early on Tuesday. Australian policymakers unexpectedly hiked the cash rate by 25 basis points (bps) for a second consecutive month, as policymakers noted services inflation remains “too high.” The Minutes are expected to confirm policymakers’ hawkish bias, with investors looking for clues about a potential terminal rate. The People’s Bank of China (PBoC) will announce its Interest Decision. AUD/USD heads into the events trading around 0.6850.
Later this week, Federal Reserve Chairman Jerome Powell will testify before Congress. Financial markets hope for additional clues on the future of monetary policy.
Also Read:
GBP/USD higher as UK inflation awaited
Gold price declines on stronger US dollar
Natural gas rally continues after 17% weekly gains
