Daily Briefing, June 20 – FOMC Wobbles the Market While BOE is up Next
Good morning, fellas.
What a big day! GOLD surged dramatically over 500 pips to trade below $1,400 trading level. All credit goes to the US- China trade war and the FOMC. The Federal Open Market Committee voted 9-1 to hold the benchmark rate in a target range of 2.25% to 2.5%.
Considering the potential confrontation between Fed Chairman Jerome Powell and President Donald Trump over the interest rate cut, the Fed has dropped the word “patience.” Indeed, the Fed is leaving the door open for interest rate cuts in the future. It seems like a heads up to the market and government officials that the first rate cut of 2019 may come in July 2019.
For now, the focus shifts to the Bank of England’s monetary policy, which is due during the London session. Here’s what to expect from Mark Carney.
Watchlist – Key Economic Events Today
GBP – BOE Monetary Policy Meeting – 11:00 GMT
The Bank of England’s policy meeting is the last of the central bank meetings, publishing its policy decision after the Bank of Japan. The BOJ kept the monetary policy unchanged, holding the interest rates steady at -0.10%.
The UK figures will draw investor attention amid mounting anxieties that the UK economy has started getting hit by the chaos and uncertainty caused by Brexit.
On Wednesday, the Consumer Prices Index (CPI) 12-month rate was 2.0% in May 2019, down from 2.1% in April. That signals a weaker economic growth in the United Kingdom.
Despite weaker growth and rising Brexit concerns, the BOE is likely to stick to a 0.75% interest rate. Moreover, the policy summary is expected to suggest that some tightening in monetary policy will be needed over the next 2-3 years.
With no press conference or quarterly forecasts scheduled for the June meeting, the BOE is widely anticipated to repeat the same message in its statement. However, if Mark Carney follows in the footsteps of Mario Draghi and Jerome Powell, this can trigger a massive sell-off in Sterling.
USD – Philly Fed Manufacturing Index – 12:30 GMT
The BOE rate decision and FOMC are likely to overshadow the other medium-impact economic events. Despite this, we should keep an eye on US manufacturing index due from Philly Fed.
The manufacturing index is expected to remain steady at 10.6, which is higher than the benchmark rate of 0. This indicates improving conditions in the US economy.
Lastly, the ADP Non-Farm Employment Change will also be in focus today, however. the forecasts aren’t available yet.
Stay tuned to FX Leaders for more exciting updates and trade setups. Good luck!
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