Markets await CPI for rate cut signals
Fed Chair Jerome Powell expressed cautious optimism about inflation trends, emphasizing the need for continued positive readings before policy adjustments.
Gold prices have risen for the third consecutive day
USD/JPY trading above 161.70
Federal Reserve
- Fed Chair Jerome Powell expressed cautious optimism about inflation trends, emphasizing the need for continued positive readings before policy adjustments. He noted that the current policy remains restrictive and that the economy is growing at about 2%.
- Federal Reserve Governor Lisa Cook suggested that US inflation could decline without a significant rise in unemployment, indicating a potential soft landing.
Currencies
- The New Zealand and Australian dollars are the top performers. The Japanese yen is weaker, with USD/JPY trading above 161.70.
Gold Market
- Gold prices have risen for the third consecutive day, climbing above $2,380. This is due to expectations of a US rate cut in September, sustained central bank buying, and macroeconomic uncertainties. However, the risk-on environment may limit further gains, with traders awaiting the US CPI report for more guidance on the Fed's rate path.
Oil Market
- WTI crude oil prices are maintaining modest gains, hovering just below $82.00. The uptick is driven by a significant drop in US crude inventories, supply disruption concerns, and a softer USD.
- However, China's economic challenges might limit further gains ahead of the crucial US CPI report. The EIA reported a substantial reduction in crude inventories, supporting prices amid a modestly weaker USD. OPEC has maintained its forecast for strong global oil demand growth for this year and next.
Economic Calendar
- The key event today will be the release of the US inflation report. FOMC representatives have emphasized the need for confirmation of a sustained downward trend in inflation. The June report will significantly impact market expectations regarding a potential rate cut in September. The consensus indicates a slight decrease in headline inflation to 3.1% year-over-year (previously 3.2%) and the maintenance of core inflation at 3.2% year-over-year.
Other Key Events
- 01:30 PM BST, United States - Employment Data for June:
- Real Earnings: previous 0.4% MoM.
- Jobless Claims 4-Week Avg.: previous 238.50K.
- Initial Jobless Claims: forecast 236K; previous 238K.
- Continuing Jobless Claims: forecast 1,860K; previous 1,858K.
- 01:30 PM BST, United States - Inflation Data for June:
- CPI: forecast 3.1% YoY; previous 3.3% YoY.
- CPI: forecast 0.1% MoM; previous 0.0% MoM.
- Core CPI: forecast 0.2% MoM; previous 0.2% MoM.
- Core CPI: forecast 3.4% YoY; previous 3.4% YoY.
- 04:30 PM BST, United States - FOMC Member Bostic Speaks.
- 10:30 PM BST, United States - Joe Biden Press Conference.