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On May 20th, four sources revealed that a June rate hike by the European Central Bank (ECB) is a foregone conclusion, but the bank is cautious about further action, aiming to curb market expectations of swift follow-up action in July. The ECB kept interest rates unchanged in April, but internal discussions about a rate hike had taken place, with hints of a possible June action due to persistently high energy costs. Sources stated that the inflation outlook is currently developing in the "unfavorable scenario" envisioned by the ECB, and with no signs of easing tensions in Iran, the bank must act at its next meeting. This is because inflation has reached 3%, far exceeding the 2% target, and the bank needs to maintain its credibility after signaling a policy adjustment. They added, "Even if a peace agreement is reached before the meeting, there is no guarantee that it will remain effective, and energy prices will remain high for some time as markets take time to return to normal." However, a subsequent rate hike is not urgent, as current price pressures are much milder than in 2022, and the long-term effects of this price surge have not yet materialized. Several factors suggest that the bank may postpone its July plans until September to make new forecasts, unless the inflation outlook deteriorates significantly.Samsung union official: Under the provisional agreement, Samsung is expected to allocate approximately 11.5% of its operating profit to bonuses.According to Saudi media Alhadath: Pakistans Interior Minister met with Iranian President Pezeshizian in Tehran.1. According to the EIA report: For the week ending May 15, U.S. crude oil exports increased by 112,000 barrels per day to 5.604 million barrels per day; U.S. Strategic Petroleum Reserve (SPR) inventories decreased by 9.92 million barrels to 374.2 million barrels, a decrease of 2.58%; commercial crude oil inventories excluding strategic reserves decreased by 7.863 million barrels to 445 million barrels, a decrease of 1.74%. 2. According to Al Jazeera, sources indicated that all parties are working diligently to finalize the text of the agreement between Washington and Tehran. The Pakistani Army Chief of Staff may visit Iran tomorrow to announce that the final version of the agreement text has been completed. 3. The latest report released by the World Bureau of Metal Statistics (WBMS) shows that in March 2026, global primary aluminum production will be 5.6333 million tons, consumption will be 5.9774 million tons, resulting in a supply shortage of 344,100 tons. 1. In the first quarter of 2026, global primary aluminum production was 17.5159 million tons, while consumption was 17.8796 million tons, resulting in a supply shortage of 363,700 tons. 2. The latest report released by the World Bureau of Metal Statistics (WBMS) shows that in March 2026, global refined copper production was 2.2792 million tons, while consumption was 2.1357 million tons, resulting in a supply surplus of 143,500 tons. 3. Iranian Parliament Speaker Ghalibaf stated: "The enemys overt and covert actions indicate that they are seeking a new round of war. The people can rest assured that our armed forces have made full use of the ceasefire opportunity to rebuild their capabilities in the best way." 4. The Brazilian Association of Vegetable Oil Industries (Abiove) released the latest soybean and processed product forecast data: Brazils soybean harvest in 2026 is expected to reach a record 180.13 million tons, a 5% increase over the previous year, compared to a forecast of 177.85 million tons last month. Brazils soybean ending stocks for 2026 are projected to reach 8.25 million tons, an increase of approximately 1.5 million tons from the April forecast, marking the highest level since 2017. Brazils soybean exports for 2026 are projected to reach a record 114.1 million tons, up from 113.6 million tons in the previous months forecast. The CEO of Freeport Indonesia stated that the recovery process at the Grasberg gold and copper mine is taking longer than expected, with operations expected to reach near full capacity by the end of 2027.Iranian Foreign Ministry Spokesperson: The United States has made many demands, but the question is, why would Iran want to transfer its materials to another country? Think back to the past when no one was worried about our nuclear program at all, and now everyone still knows that our nuclear program is 100% peaceful.

US Dollar Index reaffirms 20-year high on Ukraine-related news

Alina Haynes

Sep 26, 2022 14:32

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While risk aversion rises on Monday morning, the US Dollar Index (DXY) is still bullish over 113.80. It recently reclaimed the 20-year high above 114.70. In addition to bad attitude, Fed members' hawkish views also assist the US currency.

 

The head of the Federal Reserve, Jerome Powell, said, "We are committed to deploying our tools," on Friday. Fed Vice Chair Lael Brainard then added that low-income people are feeling the effects of "hard" inflation. Despite the economy's continuing speed, Atlanta Federal Reserve President Raphael Bostic told CBS' "Face the Nation" over the weekend that he still believes the central bank can cut inflation without substantial job losses.

 

Recent US S&P Global PMIs for August, issued on Friday, showed an increase in the Manufacturing index to 51.8 from 51.5, and an increase in the Services index to 49.0 from 44.6.

 

The president of Ukraine, Zelenskiy, was recently mentioned on a different page of a CBS article as saying, "Putin's nuclear threats may have been a bluff, but now it may be a reality." While Russia's foreign minister said annexing territory hosting widely criticized referendums would be met with complete protection from Moscow, the United States warned of "catastrophic ramifications" if Moscow utilized nuclear weapons in Ukraine.

 

Despite the Fed's hawkish attitude and rate increase, risk aversion gripped Wall Street, and rates helped the US currency stay higher. Although this occurs, S&P 500 Futures only fall by a few points as 10-year US Treasury yields climb by four basis points to 3.74 percent.

 

The US dollar index's future strength against major currencies may be aided by investors' reluctance to take on additional risk. Still, comments from Fed Chair Powell and US Durable Goods Orders are major triggers to keep an eye on for clues about the market's future course.

 

A daily close above 114.00, which coincides with a higher-trending resistance line from May, is needed for the DXY bulls to keep control. Dollar investors, however, should be wary of the indicator's current overbought reading of 14.


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