Here is what you need to know on Thursday, June 17:
The dollar is holding onto gains triggered by a surprisingly hawkish Fed decision, while gold is licking its wounds. The bank signaled tapering is on the agenda and raised its forecasts. The Aussie and the kiwi fought back in response to robust data US jobless claims and the Swiss rate decision are eyed.
Tapering and hikes: The Federal Reserve surprised markets by signaling two rate hikes in 2023 and the beginning of a discussion about tapering bond buys in the coming meetings. The bank also upgraded growth and employment forecasts, while limiting inflation increases to 2021.
Federal Reserve ups the ante on inflation, growth and interest rates
The dollar surged in response to the dot-plot and held up after Fed Chair Jerome Powell only marginally distanced himself from the dots. He sounded upbeat on employment and about normalizing policy. Bond yields leaped, with returns on 10-year Treasuries hovering around 1.57%, and gold tumbled toward $1,800.
EUR/USD tumbled below 1.20 ahead of final inflation figures from the eurozone for May. GBP/USD slipped below 1.40, also due to a rapid increase in COVID-19 cases in Britain. The Delta variant is wreaking havoc.
AUD/USD stands out with a swift recovery after Australia reported a whopping increase of 115,200 jobs in May and a drop in the Unemployment Rate to 5.1%. NZD/USD benefited from a rapid recovery in New Zealand – a growth of 1.6% in the first quarter.
The Swiss National Bank is set to leave its internet rate unchanged at -0.75%, the same negative rate since 2015. The SNB has vowed to intervene and weaken the currency in the past.
Cryptocurrencies have edged lower, with Bitcoin sliding under $39,000 and Ethereum on the defensive above $2,400. Shiba Inu is experiencing substantial volatility.
US weekly unemployment claims are set to remain under 400,000 for yet another week and the Philly Fed Manufacturing Index is projected to drop from 31.5 points seen in May.
US President Joe Biden is back in Washington after a summit with Russian President Vladimir Putin. The closely watched meeting in Geneva resulted in small gestures and many disagreements, yet had no effect on markets. Investors are interested in bipartisan talks about an infrastructure bill.
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