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June 18, Capital.com analyst Daniela Hathorn said in a report that the latest inflation data in the UK is unlikely to affect the Bank of England to resume cutting interest rates. The annual rate of CPI in the UK slowed down moderately to 3.4% in May from 3.5% in April. Although not catastrophic, these data did not impress those who hoped for a stronger trend of inflation decline. The market generally expects the Bank of England to keep the interest rate unchanged at 4.25% in Thursdays interest rate decision.June 18th, John Velis, macro strategist for the Americas at Bank of New York Mellon, said that no interest rate changes are expected at the upcoming Federal Reserve meeting, but the new Summary of Economic Projections may affect the market. The dot plot will indicate that the rate cut in 2025 will be lower than previously expected. Given that the market expects nearly two rate cuts this year, a more hawkish dot plot may disrupt the market. The Federal Reserve has become increasingly cautious about cutting interest rates in 2025, noting that inflation remains the top priority for most members who have shared their ideas. Given the continued uncertainty in policy, the Federal Reserve is unlikely to soften its interest rate views. After June, there are only four Federal Reserve meetings left this year, and it seems increasingly unlikely that there will be time for aggressive easing during the year.Hong Kongs Hang Seng Index closed at 23,710.69 points on June 18 (Wednesday), down 269.61 points, or 1.12%. Hong Kongs Hang Seng Tech Index closed at 5,214.41 points on June 18 (Wednesday), down 77.44 points, or 1.46%. The CSI 300 Index closed at 8,594.19 points on June 18 (Wednesday), down 100.48 points, or 1.16%. The H-share Index closed at 4,091.13 points on June 18 (Wednesday), down 36.17 points, or 0.88%.June 18, ING Bank commodity strategists said that the biggest concern in the oil market is the closure of the Strait of Hormuz, which will affect the flow of oil in the Persian Gulf. Nearly one-third of the worlds seaborne oil trade passes through this choke point. Severe disruptions in oil circulation are enough to push oil prices up to $120 a barrel. They predict that in this case, OPECs spare capacity will not help ease market tensions, as most of the spare capacity is located in the Persian Gulf. In this case, governments may have to use their strategic oil reserves, although this is only a temporary solution.Ukrainian MP: The Ukrainian Parliament passed a law on Ukrainian multiple citizenship.

With an eye on ECB policies, the US Dollar Index defends its recovery from a two-week low of 107.00

Daniel Rogers

Jul 21, 2022 11:40

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After recovering from a two-week low the previous day, the US Dollar Index (DXY) hovers at 107.05. In doing so, the dollar index reflects market trepidation before to a major monetary policy meeting of the European Central Bank (ECB). The day before yesterday, the DXY had its first daily rise in four days.

 

Market concerns about a European recession and strong inflation data from the UK and Canada may be to blame for the DXY's increase. The demand for safe haven assets such as the US dollar increased as a result of Sino-American tensions and China's covid problems.

 

Vladimir Putin, the president of Russia, reportedly said that it is unclear in what shape the Nord Stream 1 machinery would be returned after maintenance. According to Reuters, Ursula von der Leyen, president of the European Commission, said on Wednesday that a total suspension of Russian gas was a viable possibility. It should be highlighted that concerns over gas prices may have caused the International Monetary Fund (IMF) to decrease its growth forecasts for Germany. Because of this, the IMF projected Germany's growth to be 1.2 percent in 2002 and 0.8 percent in 2023. In a previous forecast, the IMF predicted that the German economy would grow by 2% per year. Along with the IMF, the Asian Development Bank (ADB) has lowered its forecast for growth in developing Asia from 5.2 percent to 4.6 percent for 2022.

 

Political worries in Italy also foreshadowed further misery for the EU and the markets. Consequently, Prime Minister Mario Draghi received a vote of confidence; but, because the vote was boycotted by the three major cotillion parties, Mr. Draghi may resign and call for early elections.

 

Wall Street ended the day with smaller gains in line with the mood, as the US 10-year Treasury yield halted rising after a two-day rise at about 3.03 percent. As a result, as of the time of publication, intraday S&P 500 Futures were down 0.25 percent at 3,952.

 

Moving forward, DXY traders can find some fun in the US Weekly Jobless Claims and July Philadelphia Fed Manufacturing Survey. However, as markets expect a greater rate hike than the 0.25 percent increase proposed the day before, the ECB's decision will draw a lot of attention. Therefore, in order to prevent the US currency from continuing its current recovery, ECB officials must not only announce the 25 basis point rate increase but also take further steps to win back the confidence of Euro bulls.


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