FOREX News Today

European Outlook: The recovery in stock markets didn’t last long and markets headed south again in Asia overnight, with U.S. and U.K. stock futures also under pressure. Fed and BoJ kept policy on hold and while this was largely expected, there were some lingering hopes that at least the BoJ would add further stimulus but with the statement maybe a tad less dovish than expected, the Yen strengthened and Japanese equities sold off, with the Nikkei down -2.98%. The Hang Seng is down -2.20%. The focus now shifts to BoE and SNB meetings today. Again no changes are expected, but with Brexit risks looming the tone of the statements will be watched carefully. Event risks continue to overshadow data releases, which today include U.K. retail sales and the final reading of Eurozone May HICP numbers.

The FOMC left the funds rate unchanged: The Fed again did not define a “balance of risks” and didn’t give any clear indication of the timing of the next hike, though it still expects two more this year. “Growth in economic activity appears to have picked up,” said the statement, but the “pace of improvement in the labor market has slowed.” This contradiction was the opposite in the previous statement, though it also noted that household spending has improved and the drag from net exports has lessened, while business investment has been soft. The Fed again indicated that inflation is running below target. There was no dissent this time from Esther George, (long time hawk), compounding the more dovish interpretation. Likewise, the dot-plot was significantly lowered, growth outlook trimmed and inflation outlook tweaked just slightly higher despite the rebound in energy prices. FOMC forecast revisions released with the policy statement show surprisingly large downward revisions in the official GDP forecasts for 2016, followed by downward bumps across the forecast horizon, leaving a distribution of 2016 Fed estimates that lie almost entirely below our own 2.2% forecast.

BOJ: The Bank of Japan refrained from expanding monetary stimulus as Governor Haruhiko Kuroda and his board continues to gauge the economic impact of their unpopular negative-rate policy ahead of an election next month. With the uncertain outlook for global markets also giving reason for pause, the BOJ held its key interest rate at minus 0.1 percent and kept the annual target for expanding the monetary base at 80 trillion yen ($764 billion). Dollar and GBP weakness and yen strength continued following the announcement USDJPY traded as low at 104.04 and GBPJPY as low as the 147.30.

US data reports: Revealed a welcome June Empire State bounce to 6.0 that reversed the May plunge to -9.0, though industrial production underperformed in May with a 0.4% drop led by a 7.0% drop in the vehicle assembly rate to an 11.4 mln clip. The vehicle sector pullback explains May weakness in other payroll and sentiment data, and a likely vehicle sector rebound into the shifting summer retooling period should support a June factory sector bounce as seen with Empire State. We also saw a 0.4% May PPI rise with a firm 0.3% core price increase, as US inflation measures continue to document both a rebound in commodity prices and a firm 2016 core price path.

Main Macro Events Today

• Swiss National Bank  The official view from SNB remains that prolonged period of low interest rates carries risk for global financial stability.  Rates are currently -0.75% and no change is expected.  Prolonged period of low interest rates carries risk for global financial stability.  The SNB’s baseline scenario assumes that economic conditions for the Swiss banking sector improve. Economic growth picks up moderately in the euro area, but unemployment remains high in many member states. In the US, growth remains robust. Growth in China slows further and some major emerging markets remain in recession. In Switzerland, the recovery continues and unemployment begins to decline slowly after peaking in the second half of 2016.

 

•  UK Interest  Rate decision  No change expected UK rates with a week to the UK Referendum on membership of the EU. CPI has been under pressure and there is a very low probability of interest rate hikes before 1Q 2017.  The press conference is always of interest.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

Stock markets started to stabilise overnight, as the Yen weakened and helped exporters to bounce back ahead of today’s Fed decision. The BoJ is due to follow and some speculation of further central bank action has also underpinned the first improvement in Topix and Nikkei in five days. Chinese reversed early losses and jumped higher, sparking speculation that state-backed funds may be supporting the market, after MSCI Inc. refused to add China’s domestic equities to the benchmarks indexes. U.S. stock futures are still in the red ahead of the Fed, but FTSE 100 futures are moving higher. Oil prices are down, with the front end Nymex future trading below USD 48 per barrel. Nervousness remains ahead of the round of central bank decisions this week and next week’s Brexit referendum. The events will likely overshadow the data calendar once again, which has U.K. labour market data and European trade numbers.

FOMC began its meeting and announces its policy stance this afternoon at 14:00 ET. While a hike today is off the table, the policy statement and Fed forecasts will be scrutinized for clues on the rate path going forward. Outside of the weak May employment report, most pieces of data have been consistent with GDP growth of 2.6% this quarter. Price pressures have also been on the rise. And these factors support expectations that the FOMC will look to normalize further, and perhaps as soon as July, as is out view, as well as the Median estimate from last week’s Survey. The Fed’s dot plot is likely to again show 2 tightenings this year, though the median rate might be revised slightly lower. We also expect Fed Chair Yellen will be cautiously optimistic on the economy in her press conference, while still acknowledging the downside risks, as she did in her June 6 speech.

Canada Household Leverage Remains Near Record High: Canada’s household leverage remained elevated in Q1, as the ratio of household credit market debt to disposable income slipped ever so slightly to 165.3% from a record high 165.4% in Q4. The historically elevated debt to income ratio continues to highlight a prominent risk associated with the current policy setting. However, the Bank of Canada’s focus is growth and inflation, so rising leverage amid the current ultra accommodative rate environment will continue to be taken in stride by policymakers.

Atlanta Fed’s GDPNow was lifted to 2.8% in Q2 from 2.5% previously in the wake of the gain in May retail sales: “The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.8 percent on June 14, up from 2.5 percent on June 9. After this morning’s retail sales release from the U.S. Census Bureau, the forecast for second-quarter real personal consumption expenditures growth increased from 3.5 percent to 3.9 percent. The next GDPNow update is Friday, June 17.”

Yesterday’s US reports revealed the expected May strength in retail sales and surprisingly large trade prices increases, though we also saw restrained business inventory gains that lowered our Q1 GDP growth estimate to 1.1% from 1.2%, versus the 0.8% prior reported pace. For retail sales, we saw only small prior revisions that had no net impact on our GDP forecasts, with expected May gains for gasoline station and auto dealer sales. For trade prices, we saw big increases in oil import and food export prices, but also big core price gains, and with boosts in prior import price gains that trimmed the skewing of recent trade price strength toward exports.

Main Macro Events Today

• Canada Manufacturing: We expect manufacturing shipments, due Wednesday, to grow 1.0% in April (median same at +1.0%) after the 0.9% m/m drop in March and 4.0% plunge in February. A 1.5% gain in export values after the 4.1% drop in March and 6.8% plunge in February provides a compelling reason to forecast a gain in manufacturing shipment values during April.

• US NY Fed “Empire State” Index: June producer sentiment kicks off with the release of the Empire State Index on Wednesday. We expect the headline to climb to -1.0 (median -4.0) after a tumble to -9.0 in May from 9.6 in April. Producer sentiment as settled back near recent lows with the ISM-adjusted average of all measures hitting 49 again in May after a spike to 53 in March and subsequent dip to 51 in April.

• US Industrial Production: May industrial production is out Wednesday and should reveal a 0.2% (median unchanged) headline decline following a 0.7% increase in April and a 0.9% decrease in March. Capacity utilization should fall to 75.2% (median 75.3%) from 75.4% in April. Factory and mining employment both declined in the May employment report which could indicate downside risk for the release.

• US FOMC: We expect no rate hike today but the policy statement and Fed forecasts will be scrutinized for clues on the rate path going forward.

• Bank of Canada: Governor Poloz speech.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.