GBP underperforms as inflation fails to tick higher
Trump is said to impose announce tariffs on China soon
FOMC decision and Powell presser in the spotlight
Despite news that the US President may impose tariffs on Chinese goods as soon as this Friday European indices are trading mostly in green with major advance observed on the Italian market. In the evening FOMC will make its interest rate decision with a hike being an expected scenario. The Jerome Powell presser coming afterwards will draw the most attention as investors will try to assess the possibility of fourth rate hike this year. Elsewhere, the British pound trades as the worst G10 currency following an inflation report that was in-line with the expectations. On the commodity front we are observing minor declines of precious metals. It is worth to note that the cryptocurrency market bleeds following the Bitcoin price manipulation news.
Over the past 24 hours cryptocurrency market took a hit as there were concerns raised that the last year’s Bitcoin bull run could have been caused by the price manipulation. The declines are observed on all the major coins with Bitcoin price tumbling below the $6500 handle.
In our view the Fed will increase interest rates to 1.75% - 2% corridor. There’s no reason not to do it: economy is solid, unemployment is low, inflation is highest in 6 years, markets are in a good shape. However, this has been mostly discounted by the markets and the question is what the Fed suggests about future moves.
UK inflation stayed put in May in line with expectations while fuel boosted PPI input prices implying more inflationary pressures to come over the next months. In effect, the pound deepened its slump being the worst major currency at the time of writing.
While Donald Trump hailed a meeting with North Korean leader Kim Jong Un in Singapore he quickly cut speculations regarding sanctions on the country - they are to stay in place. Meanwhile, the Trump’s administration is expected to slap tariffs on some Chinese imported goods it has announced recently.
Each morning post this week we are beginning with revelations concerning US President Donald Trump, and today is not differently. According to Politico Trump is expected to impose tariffs on Chinese goods as soon as this Friday or next week.
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