The U.S. Dollar remains on the weakening trend for the week just ahead of the much-awaited Federal Reserve policy meeting at 2 PM this afternoon.
Overview
Markets are on the lookout for any indication from the Fed Chairman Jerome Powell that officials are considering hiking up more aggressively down the line, say by 75-basis-points at their next meeting. It is believed that a more hawkish Fed could sink stock values, but we shall see.Per some major bankers such as JP Morgan Chase CEO Jamie Dimon, the Fed is acting a bit late and should have tightened faster since now there is a 33.0% chance the economy lands on a mild recession. Plenty of questioning will come at the presser, an event that will not be virtual like all meetings past 2 years.Data-wise, the ADP Employment Change for April revealed less added jobs than originally thought coming in at 247K vs. an expected 383K. The numbers are about 200K less than the month prior. We get the official Employment Situation on Friday. Be ready for a volatile next couple of days as markets react and adjust to Fed narrative.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro rose from a mix of confidence-boosting items that are getting it away from its weakest levels since 2017. Energy companies welcomed an announcement by the European Union to gradually ban oil imports and dent Russia’s ability to do business globally. Additionally, other Russian banks and lending institutions have been prohibited from using the SWIFT system.
Meanwhile, European Central Bank Executive Board Member Isabel Schnabel made very hawkish comments on the need to tighten monetary policy to combat inflation seriously. According to Schnabel, a hike should be coming as soon as July.
GBP
The Pound is also getting away from depreciated levels, the worst since the Summer of 2020, ahead of the Bank of England’s meeting tomorrow. At 0.75%, Andrew Bailey and other officials are expected to agree to bring it up to 1.0%, hiking another 25-basis-points.
Economically, the U.K. has managed to stay on a steady path as pressures from the conflict also inflict commercial turbulence. Anything that sounds dovish from them could sink the Pound back to multi-year lows, but we think the Sterling will manage to stay buoyant.
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