Markets React to Key Data and Rate Path Adjustments

Equities show a modest rebound ahead of key data releases, while the dollar weakens, providing support to major currency pairs. The Federal Reserve's rate path adjustments continue to influence market sentiment, particularly bolstering the Dow Jones Industrial Average. Additionally, concerns over potential intervention prompt the strengthening of the yen for a third consecutive session, while the European Central Bank (ECB) officials discuss rate hikes, leading to the EUR/USD pair reclaiming $1.10. Moreover, oil prices respond to comments from the International Energy Agency (IEA) chief and various factors.

Key Factors for Today

• Equities rebound as markets anticipate crucial data.
• Dollar weakness bolsters major pairs before the release of important CPI figures.
• Fed rate path adjustments influence market sentiment and provide support to the Dow.
• The yen strengthens for a third session amid intervention concerns.
• ECB officials discuss rate hikes, leading to the EUR/USD pair reclaiming $1.10.
• Bank of England (BOE) Governor insists on tightening, boosting the Cable to a 15-month high.
• Oil prices react to comments from the IEA chief and other factors.

Market Movers

• Equities trend slightly higher in recovery mode from Friday's reaction to employment figures.
• The dollar comes under pressure, allowing major pairs to receive a boost.
• The New York Fed survey reveals a lower inflation expectation of 3.8% a year from now.
• The Atlanta Fed updates its GDPNow forecast, expecting 2.3% annualized growth in Q2.
• The yen marks a three-day streak against the dollar on intervention fears.
• Eurozone Sentix investor confidence falls below expectations, but ECB officials discuss rate hike possibilities.
• BOE Governor warns of rising wages and unacceptably high inflation but refuses to raise the rate target.
• Crude prices fluctuate due to China's inflation drop and the IEA chief's comments.

Economic Calendar

• German Inflation Rate
• UK Jobs
• German and EA Zew
• Fed Bullard Speech
• API Crude Oil Stock Change
• RBNZ Interest Rate Decision

The Big News

Equities Rebound as Markets Anticipate Key Data and Rate Hikes, Dollar Weakens

Equities show a modest rebound after experiencing a dip on Friday in response to the latest employment figures. With little on the economic calendar, markets eagerly await the release of crucial data that could potentially shape investor sentiment. Meanwhile, the dollar weakens, benefiting major currency pairs. The New York Fed's survey of consumer expectations reveals a lowered inflation projection for the coming year, indicating a possible easing of inflationary pressures. In addition, a series of speeches by Federal Reserve officials emphasize the case for more rate hikes in the near future, influencing market expectations.

Dow Jones Industrial Average Rises as Investors Adapt to Fed's Rate Path Adjustments, Inflation Expectations Ease

The DJIA experiences a boost as investors adjust to the Fed's rate path adjustments. The June survey highlights the downward revision in inflation expectations, providing some relief to market participants. However, the Manheim wholesale used car prices report indicates a significant drop, the largest since the pandemic, which could suggest a moderation in inflationary pressures. The Atlanta Fed updates its GDPNow forecast, forecasting a 2.3% annualized growth rate in the second quarter.

Japanese Yen Strengthens Against Dollar, ECB Officials Discuss Rate Hikes Amid Mixed Views on Inflation

The Japanese yen continues its strengthening streak against the dollar for the third session, raising concerns of potential intervention by the Bank of Japan (BOJ). In the Eurozone, ECB officials discuss the possibility of rate hikes, with differing views on how to handle inflation. Eurozone Sentix investor confidence falls below expectations, but investor sentiment improves as ECB officials emphasize the need for tightening. The EUR/USD pair reclaims $1.10 and exhibits a three-day winning streak.