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Analysis

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

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

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NZDUSD

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

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AUDCHF

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
  • USD CPI
  • GBP BOE Gov Bailey Speaks
  • GBP GDP
  • USD PPI
  • 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
TIOmarkets

DISCLAIMER: TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.

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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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