Fed not expected to hike

BY Janne Muta

|June 12, 2023

US equities gained slightly on Friday as the lack of major macroeconomic data releases the volatility at bay. This lack of market movement was prevalent throughout the markets we track on a daily basis. None of the indices, commodities and dollar pairs exceeded the 1% volatility threshold. Clearly, the approaching Fed rate decision has kept both institutional investors and traders alike in a wait-and-see mode.

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The US inflation data release tomorrow is going to be a highly watched number as market participants look for clues on whether the Fed might leave the rates untouched or hike by 25 basis points. Inflation is expected to continue the downward trend. If the market expectation is met the Fed most likely skips the rate hike and resorts to hawkish language. The Fed Funds Futures traders place a 72% probability on the Fed not hiking the rates this week.

This week we’ll also have the BOJ and the ECB rate meetings. The BOJ isn’t expected to change its ultra-loose monetary policy while the ECB is likely to hike by 0.25%, taking the main refinancing rate to 4.00%. Other key risk events this week include the releases of Australian employment numbers, US retail sales and US consumer sentiment data.

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S&P 500

S&P 500 remains bullish above 4256. Below the level, look for a move to 4230.

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GBPUSD is bullish above 1.2534. Below the level, the market probably trades down to 1.2490.

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NZDUSD is bullish above 0.6085. Below the level, the market could 0.6030.

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AUDCHF is bullish above 0.6022. Above 0.6022, look for a move to 0.6150. Below the level, the market could move to 0.5988. Note, however, that the market is trading near the channel high. This increases the probability of retracement in this uptrend.

The Next Main Risk Events

  • USD 10-y Bond Auction
  • AUD NAB Business Confidence
  • GBP Claimant Count Change
  • GBP Average Earnings Index
  • EUR German ZEW Economic Sentiment
  • GBP BOE Gov Bailey Speaks
  • USD FOMC Economic Projections
  • USD FOMC Statement
  • USD Federal Funds Rate
  • USD FOMC Press Conference

For more information and details see the TIOmarkets economic calendar.

Trade Safe!

Janne Muta
Chief Market Analyst

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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