- Key US CPI data was released yesterday which unexpectedly showed lower inflation due to absence of any month-on-month inflation. The annualized CPI fell from 3.4% to 3.3%. Two of the major US equity indices, the NASDAQ 100 and the S&P 500, closed yesterday at new all-time record prices after rising sharply following the news, despite a more cautious approach from the Fed yesterday at its policy meeting.
- The US Federal Reserve’s policy meeting yesterday took place a few hours above the US CPI data which sent stocks higher and the US Dollar lower on stronger expectations of rate cuts went some way to dampen more dovish expectations, with the Fed signalling only one rate cut likely this year. Fed Chair Powell stated that inflation had eased substantially but is still too high, and that the Fed does not yet have enough confidence on inflation to make a rate cut, so the rate was left at 5.50%. This went some way to shoring up the US Dollar but left most major US equity indices rising. According to the CME FedWatch tool, about 62% expect that the first interest rate cut will happen in September.
- Gold rebounded yesterday from the medium-term strong support around $2285.
- In the Forex market, the strongest major currency since the Tokyo open is the US Dollar, while the Japanese Yen has been the weakest major currency, putting the USD/JPY currency pair in focus.
- The Indonesian Rupiah is still trading near a 4-year low against the USD, but a rate hike seems unlikely as President Widodo seems relaxed about the weak Rupiah. Bank Indonesia stated earlier this week that it does not expect USD/INR to breach 16,300.
- Australian Unemployment data released earlier today came in almost exactly as expected.
- There will be a release of US PPI data today, which is an inflation indicator. It is expected to show a sharp month-on-month drop from a 0.5% increase to a 0.1% increase.
Forex Today: Lower US Inflation Sends Stocks Soaring Despite Cautious Fed - 13 June 2024
Adam Lemon
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