Market Comment – Fed stops dollar’s CPI-related bleed, BoJ next
Dollar tumbles after weaker-than-expected CPI data
Recovers somewhat after Fed signals one rate cut
BoJ decision looms as investors bet on July hike
US CPI data propels Wall Street to fresh records
![](https://www.xm.com/wp-content/uploads/2024/06/Perf_Jun13-1.png)
Inflation slows, Fed sees one rate cut in 2024
After a turbulent session, the US dollar finished lower against all its major counterparts on Wednesday. That said, it seems to be licking its wounds today.
The greenback was sold massively yesterday, after the US CPI data revealed that consumer prices stagnated in May, resulting in a decline in the yearly headline inflation rate to 3.3% from 3.4%.
That said, a few hours after the report, the greenback began recovering some of the lost ground as the Fed appeared more hawkish than expected, revising up its interest rate projections to point to one rate cut this year from three in March.
That said, the Fed’s hawkishness was not enough for the dollar to finish the day in the green. Perhaps this was because the inflation data did not allow market participants to take the dot plot in faith. Or possibly, it was Powell’s remarks that regardless of the dots, everyone in the Committee is ‘very data dependent.’
Indeed, according to Fed funds futures, the market is penciling in nearly two 25bps reductions by the end of the year, assigning around a 65% probability for the first one to be delivered in September.
Until September, investors will have to digest a lot of data, and with 8 Fed members already voting for two rate cuts this year, economic releases pointing to further slowdown in inflation could add credence to investors’ view and thereby bring the US dollar under renewed pressure.
Economic releases pointing to further slowdown in inflation could add credence to investors’ view and thereby bring the US dollar under renewed pressure
Will the BoJ hint at a July hike?
Tonight, the central bank torch will be passed to the Bank of Japan. The Bank is expected to keep interest rates untouched, but according to sources, policymakers will consider whether to scale back their Japanese Government Bond (JGB) purchases. The key part here is “will consider whether”, which means that they could decide not to reduce their purchases, at least not at this gathering.
What’s more, although the larger-than-expected economic contraction seems to be putting obstacles on the road to the next rate hike, investors are still assigning a nearly 60% chance for another 10bps hike in July.
Both the report on bond buying and investors’ rate hike bets are setting the hawkish bar very high, which means that there is ample room for disappointment. In other words, if the BoJ underdelivers, the yen is likely to extend its slide, and if dollar/yen gets close to the 160.00 zone again, the risk for another round of intervention could rise.
If the BoJ underdelivers, the yen is likely to extend its slide
Stocks keep exploring uncharted territory
On Wall Street, both the Nasdaq and the S&P 500 hit new record highs for a third straight day, fuelled by the softer-than-expected inflation data. However, they ended the session off their highs due to the Fed’s hawkish interest rate projections. Both indices closed well in the green, while the Dow Jones finished fractionally below its opening level.
With the market now convinced that the Fed is more likely to proceed with two quarter-point rate cuts than one, and with investors seemingly willing to continue pricing in future opportunities for artificial intelligence (AI), the bulls are likely to continue charging in.
The bulls are likely to continue charging in
![](https://www.xm.com/wp-content/uploads/2024/06/Calendar_Jun13-1.png)
免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料,僅適用於教育/資訊類用途,不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議,或是交易價格紀錄,或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。