The U.S. Dollar is trading in mostly familiar ranges as currently, the markets watch the European Central Bank’s press conference following their policy meeting.
Overview
As the presser began, it was highlighted how this was the first time since COVID that it was a physical gathering instead of a virtual call. While the ECB seemed concerned with inflation, it also seemed to hold a more optimistic view of the economy than most share.On the dark side of markets, investors have to be worried that Shanghai has been put under another lockdown, only exacerbating concerns that the supply chain keeps meeting challenges instead of truly easing. It is indeed a battle of two camps: hope and doom, as half the markets seem to think tighter central bank policy is wholly unnecessary and will only lead to recessionary pressures as we cope now with “stagflation.”We will get key inflationary figures in the form of the May Consumer Price Index as well as a gauge of wages and the University of Michigan Consumer Sentiment tomorrow. Consumer Sentiment has been dragged to its lowest since 2009. We shall see how the buck holds its ground against all else but losing to Euro now.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro is currently on a rising trend as the European Central Bank indicated in their meeting that they are willing to tighten their policy going forward. Today, ECB President Christine Lagarde is explaining that price increases are worth combatting.
Expectations are for interest rates to be increased starting in July, but now there is even a more hawkish tune as 50-basis-points could be on the table for September. Economic forecasts were not awful, seeing a slowdown for 2023 at 2.3% growth while this year should materialize into 2.8% expansion.
GBP
The pound could be in for some seesawing as markets react to a more determined ECB in tightening monetary policy. Global markets have been affected by the idea that central banks are making another mistake by tightening too quickly in an uncertain period. Bets have increased that the Bank of England will also be raising interest hikes in September, and it is possible Sterling benefits from the speculation.
Additionally, U.K. Prime Minister Boris Johnson will be giving a speech today focusing on a plan for the economy. The beleaguered leader may try to build some credit back with his constituents and party by announcing lower corporate taxes and relief for the housing sector.
