Global Themes

Inflation above target

FX markets were focused on headlines from the US-NK summit in Singapore boosted sentiment but, overnight, a strong showing from US inflation pushed the US dollar higher.

Earlier, an agreeable meeting between US President Donald Trump and North Korean leader Kim Jong-un, followed by a deal between to two countries, saw Asian sharemarkets mostly higher.

A higher-than-excepted reading from US core inflation overnight, which climbed to 2.2% in annual terms in May, pushed the USD higher as markets turned their attention to tomorrow morning’s all-important meeting of the US Federal Reserve.

The stronger inflation reading adds to the case for further US rate hikes.

Pound gains

The USDCNH climbed 0.1%.

The euro and Australian dollars both fell versus the HKD.

The British pound gained after the UK government successfully passed a key Brexit bill through parliament.

Fed, jobs, ECB

FX markets could see a volatile 36 hours with the US Federal Reserve, Australian jobs and the European Central Bank meeting all due.

The USD will likely be driven by the Fed’s forecasts with the market predicting a rate hike is almost certain. With inflation now above the Fed’s target, commentary around this issue will be critical.

Otherwise, Australian jobs tomorrow, and the ECB tomorrow night, means we could see significant moves over the next day-and-a-half.

Deliver the Daily Currency Market Analysis to my Inbox

Published five days a week, this newsletter provides day-to-day trends and activities affecting the market in easy-to-understand snapshots