Spreadex Market Update
Traders Brace for June ECB Meeting Today
USD treading water ahead of CPI tomorrow. Risk aversion leads equities lower. JPY rallies on safe-haven inflows. Traders brace for June ECB meeting – July rate hike signal expected. Oil prices fall following unexpected EIA surplus news.
Key Factors for Today
- USD muted as traders await CPI tomorrow
- JPY rallying as equities slip
- ECB in focus today – July rate hike confirmation expected
- Oil falls following EIA surplus news
Coming Up
- EUR ECB rate decision
- USD US unemployment claims (weekly)
- CAD BOC governor Macklem speaks
USD Range-bound Ahead of CPI Tomorrow
The US Dollar appears to have settled into consolidation mode ahead of tomorrow’s all-important May CPI number. While the greenback was generally bid yesterday, sellers emerged into the session highs, same as we saw the day before. This type of range-trading behaviour looks likely to continue through to tomorrow’s data with little in the way of US data today besides weekly unemployment claims.
Equities Slip Back Ahead of ECB and US CPI Tomorrow
Equities markets have been broadly weaker across the European open on Thursday. The FTSE is down almost 1.5% from the week’s highs with US and European indices seeing similar losses amidst a stronger US Dollar and expectations of further central bank tightening today from the ECB. The ASX200 is the worst performer, down almost 3% on the week while the Nikkei continues to trade higher on Thursday, with Asian markets generally performing better this week.
JPY Leads on Risk-Off shift, ECB In Focus Today
In FX, the losses in equities over the last 24 hours have fuelled a reversal of recent trends. JPY has been the stronger performer over late Asian and early European trading. Higher yielding currencies such as AUD and NZD have fallen lower amidst the risk off move.
Hawkish ECB Risks
EUR is holding its own ahead of the ECB meeting today which will be the main focus for currency traders. Along with announcing the end of asset purchases, the market is expecting the ECB to signal a forthcoming rate hike in July. With a .25% hike priced in, any sign of a potentially larger hike will be bullish for EUR.
Tumbleweeds Blow Through Metals Markets
Gold and silver prices continue to hold within recent ranges. It’s been a dull week for metals traders given the lack of action. Today’s ECB meeting might fuel some volatility in gold though it’s more likely the market will remain sticky until tomorrow’s US CPI number.
Oil Falls on Unexpected EIA Surplus News
Oil prices have slipped back a little over the European open on Thursday though the market is still around 4% higher on the week, as of writing. Yesterday, the EIA reported an unexpected 2-million-barrel surplus in US crude stores, against market forecasts for a drawdown of around 2.6 million barrels. With a backdrop of tighter supply and the return of demand from China, oil prices look likely to remain buoyant near-term.
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