US FOMC expected to raise rates again

13 June, 2018

At 08:30 GMT, UK Consumer Price Index (YoY) (May) is expected out at 2.5% against 2.4% previously. Producer Price Index – Input (YoY) (May) is expected at 7.6% from 5.3% previously. These data points are expected to show CPI holding steady, with a slight increase in the yearly number which is above the Bank of England’s 2% target since March of 2017 due to the change in the value of the pound after Brexit. The BOE will be watching this data closely ahead of their meeting next week and it is their belief that inflation is likely to move back to 2% in 2018. Producer Prices are expected to continue to increase from the low in February. GBP crosses can be moved by the data released at this time.

At 09:00 GMT, Eurozone Industrial Production (Apr) will be released with the consensus for -0.5% MoM and 2.8% YoY after 0.5% MoM and 3.0% YoY prior. This data is expected to decline today with the monthly figure slipping back under zero after rising last month. The fall in the data will feed into the sluggish economic data coming out of the Eurozone. The EUR can be moved by this data.

At 12:30 GMT, US Producer Price Index ex Food and Energy (YoY) (May) is expected to be 2.3% against a previous reading of 2.3%. The FED will be analysing this data for developing trends in consumer inflation. USD crosses can be affected by this data release.

At 18:00 GMT US Fed’s Monetary Policy Statement and Interest Rate Decision which is expected to be raised to 2.00% from 1.75% after the rate was increased from 1.50% in March. This hike in rates has been more or less priced into markets and marks the second in a series of expected increases in 2018. The FOMC Economic Projections will be released at the same time. It can be argued that these projections will be of greater importance as traders look to quantify the pace of rate hikes ahead in the dot plot. The market is pricing in three hikes in 2018, with a slight bias for four that could strengthen the dollar position. At 18:30 GMT, the FOMC Press Conference will take place as Chairman Jerome Powell addresses the audience. USD crosses may experience volatility during this time with a tendency for a hawkish USD.


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