The U.S. Dollar continues to trade around its best overall level in 2 years ahead of tomorrow’s much-awaited Federal Reserve meeting tomorrow.
Overview
Traders and investors foresee and seem to fear that officials will choose to hike the federal fund’s interest rate by 75 basis points in order to combat the highest inflation in 40 years. Equities around the globe are trending downward, but at least the pace of losses seems to have subsided. At the moment, we have entered a bear market, but there is another side arguing that pessimists should consider the recovery to come once supply-chain woes fade away.In terms of data supporting the desire to counter inflationary growth, the earlier release of Producer Price Index figures for May did not help come in as expected, while April figures were downwardly revised. If some areas of inflationary pressure cool down, perhaps the Fed can keep the pace of hikes just gradually and not overdo it. The market could use that break, but we will only know until tomorrow.
What to Watch Today…
- No major economic events scheduled for today
Back to Back TOP Wins | #1 G10 Forecaster for Q1 2022
Bloomberg ranks Monex USA (formerly Tempus) as the top G10 Forecaster, NZD, CHF, AUD, MXN, and GBP! Learn More
EUR
The Euro managed to erase some losses following a steadier trading session that also had investors wondering about the possibility of higher borrowing costs in the U.S. than most expected. Bond markets are wild as investors try to find refuge from the rout taking place across other sectors. Regionally, there will be major data to review in the next few days with inflation in the form of the Consumer Price Index on Friday while Industrial Production and Construction gauges come out tomorrow and Thursday.
GBP
The Pound is trading around its weakest point since March 2020, when historically low levels were reached not seen in 30 years. Sterling’s status is dropping as economic struggles are predicted for the U.K. as it enters yet another period of trade disagreements with its biggest partner, the rest of Europe, at a time when cooperation would be more ideal and critical.Supplies and energy costs are making for a difficult time, and analysts forecast that while the Bank of England will keep on hiking interest rates out of necessity, it will likely need to reverse course if further evidence of a poor economy keeps showing up. April’s gloomy Gross Domestic Product numbers were a worrisome sign for many GBP watchers.
