News

Trump-Xi Talk Boosts Risk Appetite, Fed in Focus

Equities

Major US indices settled near a six-week high amid growing optimism between China and the United States. The news that President Donald Trump spoke with the Chinese President Xi Jinping eased investors' fears over a full-blown trade war. The US and Chinese negotiators will resume negotiations today, and both presidents will have an extended meeting at the G20 in Japan later this month. The Dow Jones Industrial Average futures climbed to a six-week high of 26550, the S&P500 futures rose to 2930, and Nasdaq futures rallied to 7721. Investors will shift their focus now to the Federal Open Market Committee meeting outcome.

USD

The dollar index which measures the greenback against a basket of major currencies is hovering near a two-week high at 97.65, ahead of the Fed's interest rate decision. DXY gained on the comments of the European Central Bank president which was accused of currency manipulation by President Trump. Draghi said that further stimulus would be needed if the economic outlook continues to worsen. On the other hand, there were chatters on the market that the White House checked demoting the Fed's Chairman Jerome Powell. When asked about the matter, President Trump replied: "let's see what he does." The chances of an interest rate cut of 25 basis points in July is at 63.8%, currently. The US 10-year yields fell to 2.014%, the lowest since September 2017, the USDJPY remains caught in a tight range between 108-9, and the EURUSD dropped to $1.1180.

Metals

Gold prices had a choppy trading session yesterday which started with a rise to $1355 as US Treasury yields tumbled. However, prices plunged to $1340 as Trump announced that he spoke with the Chinese President over trade. The price of a gold ounce is trading between $1340 and $1350 ahead of the Fed's policy decision, which could have a significant impact on gold prices. On the other hand, the silver ounce settled at $14.9, while palladium extended gains to $1499.

Oil

Oil prices soared following the latest development in the Chinese-US trade disputes. The news that negotiators will resume talks, and both presidents will have an extended meeting at the G20, eased investors' woes over the global economic outlook. On the other hand, the American Petroleum Institute reported that the weekly US crude oil stock dropped by 0.812 million barrels last week. The West Texas Intermediate crude futures spiked to a high of $54.36, and Brent futures raced higher to $62.80.

Major Economic Events

GMT Country Event Expectation Previous

8:30

UK

CPI (YoY) (May)

2.0%

2.1%

12:30

CA

Core CPI (MoM) (May)

 

0.0%

12:30

CA

Core CPI (YoY) (May)

1.2%

1.5%

14:00

EU

ECB President Draghi Speaks  

 

 

14:30

US

Crude Oil Inventories

-1.077

2.206

18:00

US

Fed Interest Rate Decision

2.50%

2.50%

18:30

US

FOMC Press Conference  

 

 

22:45

NZ

GDP (QoQ) (Q1)

0.6%

0.6%


Disclaimer
 

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