This is what you need to know to trade today Tuesday June 14:
Driven by expectations around the Fed, the US dollar index DXY gained almost 1% on Monday and hit its highest level since December 2002 above 105.00. Awaiting data from the PPI Producer Price Index, the NFIB Business Optimism Index and the IBD/TIPP Economic Optimism Index from the United States, the DXY consolidates its gains. The ZEW Economic Sentiment Survey for the euro zone and Germany will be published on the European economic calendar.
The 10-year US Treasury yield gained more than 6% on Monday and the 2-year yield rose almost 10%. Both references exceeded 3.3% and now they are about to invert. Several media outlets claimed that the Fed could choose to a surprise rate hike of 75 basis points at this week’s meeting following the latest inflation data. JP Morgan and Goldman Sachs economists revised their forecasts and now see the Fed raising rates by 75 basis points on Wednesday. Finally, the CME Group’s FedWatch tool shows that markets are pricing in a 98% chance of a 75 basis point rate hike this week, up from 4% last week.
Wall Street’s major indices suffered heavy losses on Monday, but US stock index futures are up 1%-1.7% as of early Tuesday. However, in the current market environment, the rally in US equities should remain as a technical correction to Monday’s decline.
The EUR/USD fell below 1.0400 on Monday but managed to bounce back above 1.0450 early on Tuesday. Data from Germany showed that the consumer price index IPC remained unchanged at 7.9% annual in May.
The GBP/USD touched its lowest level since May 2020 on Monday, at 1.2107. The pair gained traction in the European morning and is now rising towards the 1.2200 level. The UK Office for National Statistics reported earlier in the day that ILO unemployment rate rose to 3.8% in the three months to April, compared to the market expectation of 3.6%. In May, the change in applicant count came in at -19,700, beating analysts’ estimate of -49,400 by a wide margin.
The USD/JPY remains in a consolidation phase below 135.00 on Tuesday. The Bank of Japan announced on Tuesday that it has set a new offer for its bond purchase program on June 15. Meanwhile, Japanese Finance Minister Suzuki reiterated that the yen’s recent rapid weakening was worrying and that take appropriate foreign exchange measures if necessary.
The Prayed lost more than 2% on Monday amid rising US yields and posted its biggest one-day drop since March. XAU/USD is trading up and down in a relatively tight channel below $1,830 early on Tuesday.
The Bitcoin fell 15% on Monday and extended its decline on Tuesday. After being a step away from $20,000, BTC/USD rose above $22,000. The ethereum It is trading at its lowest level since January 2021, near $1,200.
Source: Fx Street
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