News

Dollar Holds Steady, Stock Futures Slip ahead of Fed

USD

The dollar index which measures the greenback against a basket of major currencies continued to hover in a tight range near 90.50 ahead of the Federal Reserve monetary policy decision. The index rose to its highest level in a month but failed to hold gains amid growing uncertainty over the Fed's tone. The US Producer Price Index rose by 0.8% in May compared to April, adding further woes over inflation, but the retail sales disappointed to the downside, even excluding auto sales. Market participants are looking forward to the Fed's output today. There are no expectations of policy changes, but everyone is waiting for the time where the Federal Reserve will announce discussing taper. The board will issue also the economic projections, where a significant change to the inflation forecast is expected. The EURUSD hovered near $1.2130, and the USDJPY dipped to 109.95.

Equities

Futures tied to major US stock indices fell significantly as investors anticipate clues from the Federal Reserve over tapering its asset purchases program. The Dow Jones Industrial Average futures extended losses falling to 34250, the S&P500 futures retreated from their all-time high dropping to 4243, and Nasdaq futures declined to 14029.

Metals

Precious metals prices traded sideways as investors await the Federal Reserve meeting. The price of a gold ounce eased to 1853, but rebounded to $1860 where it is currently fluctuating, the price of a silver ounce held steady near $27.75, and palladium was almost unchanged near $2750.

Oil

Oil prices extended their upside rally hitting their highest levels in more than a year. Investors are optimistic over the economic recovery with many countries moving forward with lifting movement restrictions. Also, the delay in the nuclear deal negotiations is buying the market more time. Meanwhile, the American Petroleum Institute reported a decline of 8.537 million barrels in US crude oil stock. The US Energy Information Administration will report the official numbers later today. The West Texas Intermediate crude July contract rose to $72.80, and the Brent blend August contract soared to $74.70.

Major Economic Events

GMT Country Event Expectation Previous

12:30

US

 Building Permits (May)

1.73

1.733

12:30

US

 Housing Starts (May)

1.63

1.569

12:30

CA

 CPI (MoM) (May)

0.4%

0.5%

14:30

US

 Crude Oil Inventories

-3.290

-5.241

18:00

US

 Fed Interest Rate Decision

0.25%

0.25%

18:30

US

FOMC Press Conference

-

-

22:45

NZ

GDP (QoQ) (Q1)

0.5%

-1.0%

 

 

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