The US dollar is solidly rising, pushing the USD/JPY currency pair to a new 5-month high close to the big round figure of ¥140.
- Markets are dominated by a firm rally in the US dollar as expectations for another 25 basis point rate hike at the Federal Reserve’s next June meeting are rising, although FOMC minutes released yesterday showed FOMC members were evenly split with a slight dovish bias. to no rate hike in June – of course the minutes are not up to date. Expectations for a hike are strong even as the US debt limit impasse continues and policymakers are unable to reach a satisfactory resolution, which may start to risk the US credit rating. The rating agency Fitch placed the US AAA rating for the long-term default of the foreign currency issuer on negativewhich sent the broader U.S. stock market down, although tech stocks rallied sharply in recent hours.
- In the forex market, the US dollar is growing steadilyagainst its long-term trend. Action so far today has been dominated by the weakness of the New Zealand dollar and the strength of the US dollar. Trend traders will likely look for long trades in USD/JPY currency pair in the short term NZD/USD it can also be attractive. The Kiwi remains weak after the RBNZ yesterday signaled its terminal rate had been reached in a surprise move.
- Equity markets are mixedwith the feeling that the US debt ceiling issue is suppressing a broad bull market. The NASDAQ 100 Index he has recovered a lot in the last few hours and still seems quite upbeat. If a solution to the debt ceiling problem is found, we are likely to see this index rise strongly.
- Some soft commodities have made new highs and are trending strongly, esp Cocoa NIB ETFwhich rose to close at a new 5-year high on Friday.
- UK CPI (inflation) data released yesterday showed that annualized inflation fell from 10.1% to 8.7% month-on-month. A stronger decline to 8.2% was expected. This may slow today’s relative decline in the pound a bit.
- Today, US preliminary GDP data (expected to grow 1.1% annually) and new jobless claims (expected to show 249k claims) will be released.