FOMC MINUTES IN FOCUS AFTER US INDEPENDENCE DAY
The global financial markets are back in full swing Wednesday, as US traders return from Independence Day holiday.
Monetary policy speculation will be top of mind for traders in the middle of the week as the Federal Reserve unveils the minutes of its June 13-14 Federal Open Market Committee (FOMC) policy meeting. The Fed voted to raise interest rates by 25 basis points last month, as policymakers shrugged off evidence of feeble expansion in the economy. In doing so, members of the policy-setting board maintained their outlook on three interest rate increases this year. With two down, that leaves one more adjustment in the cards. Analysts don’t expect the Fed to move before December.
The minutes of the FOMC meeting will be released on the Federal Reserve’s website at 18:00 GMT.
Traders can expect a bevy of other market-moving events earlier in the day. Action begins at 07:00 GMT with a non-monetary policy meeting of the European Central Bank (ECB). Market participants have been closely following the ECB in recent weeks for commentary about the latest economic expansion. Eurozone gross domestic product (GDP) expanded 0.6% in the first quarter, a revised estimate showed last month.
Beginning at 07:15 GMT, IHS Markit will release a spate of PMI data for the Eurozone. Analysts are forecasting a Eurozone Composite PMI reading of 55.7 for June.
In North American trade, the Commerce Department will release its latest report on factory orders at 14:00 GMT. Orders for manufactured goods are projected to fall 0.5% in May after falling 0.2% the previous month.
Commodity traders will be keeping a close eye on a weekly inventory report from the American Petroleum Institute (API), which is due at 20:30 GMT. Oil prices halted their recovered Tuesday after eight consecutive gains.
A calmer dollar trade has placed downward pressure on the euro, which has lost its grip on recent 14-month highs. The EUR/USD exchange rate reached a session low of 1.1335 on Tuesday. The daily low converges with the 38.2% retracement of last week’s rally. A break below that level could expose the pair to further losses in the short term.
US crude prices finished flat on Tuesday, but remain in a firm uptrend as the market recoups last month’s selloff. West Texas Intermediate (WTI) prices are approaching one-month highs. The 6 June settlement high of $48.19 is the next major target for the bulls.
Gold prices received a boost in early-week trade on news that North Korea had successfully test-launched a continental ballistic missile. Fear-trade drove investors into the safety of bullion, although overall gains were tepid. The yellow metal extended gains through the early part of today’s session as traders assessed the latest geopolitical developments.