Here’s what you need to know on Wednesday, June 15:
News of an ad hoc meeting of the Governing Council of the European Central Bank (ECB) to discuss current market conditions, namely falling bonds, triggered a rally in the shared currency in early European session. on Wednesday. Ahead of the much-anticipated US Federal Reserve rate decision, the US dollar index started to pull away from the multi-decade high it set at 105.65 on Tuesday night. Industrial production data will be included in the European economic agenda and ECB President Christine Lagarde will speak at 16:20 GMT. The US Census Bureau will also release retail sales data for May.
Fed Interest Rate Decision Preview: Damn inflation, go full speed ahead.
Speaking on Tuesday, ECB Governing Council member Isabel Schnabel said that monetary policy can and should respond to a disorderly revaluation of risk premiums. “We will react to new emergencies with existing and potentially new tools,” Schnabel added, noting that they are closely monitoring current market developments.
The market expectation points to a 50 basis point (bps) Fed rate hike later in the day. However, reports from earlier this week set the stage for a 75bp hike and CME Group FedWatch shows that markets are now pricing in a 90% chance that the Fed will raise its policy rate by a total of 150bps. pb in the next two meetings. .
Fed Advance: Powell will sink markets or raise yields, a win-win situation for the dollar, five scenarios.
Earlier in the day, data from China revealed that Industria Production expanded 0.7% year over year in May, compared to the market expectation of a 0.7% contraction. Additionally, retail sales declined 6.7% in the same period, but this reading was better than analysts’ estimate of a 7.1% drop.
EUR/USD rose sharply towards 1.0500 on the immediate reaction to the ECB news on Wednesday. The 10-year Italian government bond yield is down more than 8% in European morning trading and Eurostoxx futures are trading in positive territory.
GBP/USD clings to modest gains above 1.2000 early Tuesday. EUR/GBP advanced to its highest level since late April above 0.8700 making it difficult for GBP/USD to gain traction. The BBC reported on Tuesday that the European Union was preparing to take legal action against the UK over changes made to post-Brexit deals.
USD/JPY It broke below 135.00 on Wednesday and was last seen trading in the red near 134.50. Japanese Chief Cabinet Secretary Hirokazu Matsuno reiterated on Wednesday that the authorities will take appropriate measures in the foreign exchange market if necessary.
Prayed is riding the pullback seen in US Treasury yields earlier on Wednesday and is trading near $1,820 after a two-day drop.
Before New Zealand’s first quarter Gross Domestic Product data, NZD/USD trades above 0.6200. In the early trading hours of the Asian session on Wednesday, the Reserve Bank of Australia will release its Q1 Bulletin and the Australian Bureau of Statistics will release the May jobs report. AUD/USDwhich fell to its lowest level since early May at 0.6850 on Tuesday, was last seen posting strong daily gains at 0.6910.
New Zealand GDP Forecast: Forecasts from three big banks, at risk of contraction.
Bitcoin trades at its lowest level since December at $21,200 early Wednesday, losing more than 4% on a daily basis. Ethereal it is down 7% and is testing $1,100.