Greenback Shrugged Off Rate Hike, ECB To Address QE

Market Reviews

The greenback is rather soft, despite yesterday’s 25 bps interest rate hike from Fed to a range of 1.75-2.00%. The interest rate paid on required and excess reserve balances was raised by +20 bps, to 1.95%. GDP and inflation forecast for this year and 2019 were improved. Additionally, FOMC projects 2 more rate hikes. Dollar, however, dropped due to concerns over the trade war. The single currency is bolstered, waiting for the ECB meeting. Aussie is the weakest due to employment data. Meanwhile, Donald Trump will hit China with 50 billion tariffs pretty soon. The list of imports covers about 1300 product lines. The final list will be published tomorrow.

Moon Jae-in (South Korean President) had a meeting with Mike Pompeo (US Secretary of State). Moon expressed his appreciation of yesterday’s US-North Korea summit. He said that “there have been many analyses on the outcome of the summit but I think what’s most important was that the people of the world, including those in the United States, Japan and Koreans, have all been able to escape the threat of war, nuclear weapons and missiles.” Pompeo replied that “we’re hopeful that we can achieve that in the 2-1/2 years.” Japanese Prime Minister Shinzo Abe is also going to meet with North Korean Leader Kim Jong-un somewhere in August.

Australian employment increased 12 thousand seasonally adjusted in May. Jobless rate fell to 5.4% and participation rate declined to 65.5%. Chinese retail sales were up 8.5% yoy in May. Industrial production reduced from 7.0% to 5.8% yoy. Fixed asset investment fell from 7.0% to 6.1% yoy. Today, Britain will release retail sales, Germany will present final Consumer Price Index for May, US will feature retail sales, import price index, unemployment claims and business inventories, Canada will publish new housing price index.