Post-FOMC news brief for June 15

Post-FOMC news brief for June 15

2019-11-11 • Updated

The Fed’s policymakers agreed to raise their benchmark lending rate, projected additional hike in 2017 and revealed their plans on how they intend to shrink their $4.5. trillion balance sheet this year. The Fed’s decision was overshadowed by extremely soft consumer prices. Headline US CPI for May eased 0.1% (against flat expected) with core inflation also falling short of market expectations and bringing annual core CPI down to 1.7% from 1.9%. Another disappointment came after the US Retail sales release which was also lower than expected in May. Retail sales fell 0.3% against investors’ expectation for a 0.1% gain.

Political turmoil in Washington also weighed on the USD. The special council responsible for the investigation of Russia’s meddling in the 2016 presidential election is going to interview two US intelligence officials about whether the US President Donald Trump sought their help to get the FBI to drop their probe into Michael Flynn’s collusion with Russian entities.

USD/JPY popped up to 109.60 in Tokyo morning after falling sharply towards 108.80 overnight on the USD weakness. We don’t expect great swings from here in the short-term looking at the economic calendar.  The Bank of Japan will in the spotlight on Friday, as it is poised to release their rate statement which will be followed by a press conference with BoJ Governor Haruhiko Kuroda. The central bank is expected to maintain its ultra-loose monetary policy settings in order to prop up inflation and domestic demand. Japan’s economy has recently received a boost from solid global demand, but inflation rates remain well below the bank’s coveted target. The BoJ’s policymakers will unlikely tighten their policy at tomorrow’s meeting. So, traders will be focused on Kuroda’s follow-up comments, looking for some hawkish notes in his tone (pay special attention to Kuroda’s words on the reduction of bond purchases).

GBP/USD fell to 1.2730 in the opening hours of the Asian session. Further weakness is seen on the horizon but solid support at 1.2560, 1.2515 will likely prevent the sharp downfall. The Bank of England is set to deliver its interest rate later today at 2:00 pm MT time. Given the political landmines dotting the UK landscape (a hung parliament as a result of the snap election, preparation for Brexit negotiations with the EU), the BOE’s policymakers will likely look through the higher inflation print. The headline inflation was at 2.9% in May and core inflation slightly lower at 2.6% (well above the bank’s target – 2%). At the previous meeting, the BOE’s officials have already indicated that they are ready to tolerate higher inflation rates despite declining consumption.  In a case of release of the dovish statement indicating the BOE’s unwillingness to tighten their monetary policy, the GBP will be hurt.

The euro unexpectedly spiked to 1.1295 yesterday on the soft releases from the US that triggered USD weakness. In Tokyo morning, the USD recouped its earlier losses and fell to 1.1185. The undertone is still on the weak side; the quotes might slide lower to 1.1160 unless the single currency manages to reclaim the 1.1200 level.

Aussie was an absolute gainer today as Australian Labor force information hit market’s expectations (a big drop in jobless rate, an increase in hours worked). The bullish phase is still clearly intact despite the scale of recent Aussie’s gains. AUD/USD is now at 0.76005. There is a room for an extension to 0.7635 (yesterday’s high). But be ready to exit your long position, at around 0.7650, as further upside will be complicated.

Similar

Why is oil's rally in danger?
Why is oil's rally in danger?

Yes, oil prices are burning right now, and inflation is getting hotter along with it worldwide. However, the oil's bullish momentum is under threat.

How Will Gas Supply Reduce Affect Eurozone?
How Will Gas Supply Reduce Affect Eurozone?

What is happening? The Russian president's announcement that countries "unfriendly" to Moscow must pay for gas deliveries with rubles shows that he's willing to use energy as a weapon in the Ukraine war…

Latest news

Walmart earnings outlook
Walmart earnings outlook

Walmart is one of the biggest retail corporations in the US, with $244 billion in total assets. Does it worth buying amid rising prices and supply concerns that shatter the world economy?

What to trade on May 16-20?
What to trade on May 16-20?

Last week brought a selloff in markets. Some assets reached the most crucial support levels and are likely to reverse in a short term. Be ahead of trends and make the most out of this week!

Deposit with your local payment systems

Be on top of your game

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera