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All eyes on BOJ and BOE

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The U.S. Federal Reserve kept interest rates unchanged on Wednesday, but hinted it still planned to hike rates twice this year, saying it expects the U.S. job market to strengthen after a recent slowdown.

On the other hand, the Fed cut its forecast for economic growth in 2016 and 2017 and indicated it would be less aggressive in raising rates after the end of this year. The U.S dollar index pared its gains and traded at 94.65 pips.

Gold inched up to $1,290 as the Fed kept rates unchanged. On the other hand, the precious metal could touch $1,300 if voters support a Brexit.

GBP traded above $1.42 in anticipation of the decision of the Bank of England, which is likely to keep its monetary policy unchanged. The Pound could be supported by UK retail sales, but the fears that surround the UK could push the GBP to decline once again.

EUR settled on Wednesday and traded at $1.1250 vs. USD. As the fiber is awaiting important data from the U.S., it could trade in a wide range during the course of the day.

Japanese yen fell to 106 vs. USD in anticipation of the BOJ decision. Despite the improved economic situation in the first quarter, the BOJ could take a preemptive action to weak its currency before EU referendum.

Oil prices fell due to U.S. industrial production fell more than expected in May and U.S. inventory gains. U.S. crude oil traded below $47.50 and could settle at 47 during the course of the week.

The most important economic events:

  • GBP Bank of England Rate Decision (JUN 16): (GMT 13:00) – Important – Forecast (0.50%) – Previous (0.50%).
  • GBP BOE Asset Purchase Target (JUN): (GMT 13:00) – Important – Forecast (375b) – Previous (375b).
  • USD Consumer Price Index (YoY) (MAY): (GMT 14:30) – Important – Forecast (1.1%) – Previous (1.1%).
  • USD Consumer Price Index Ex Food & Energy (YoY) (MAY): (GMT 14:30) – Important – Forecast (2.2%) – Previous (2.1%).

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.


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