June U.S. FED Interest Rate Decision and Inflation Data in Major Market Agenda Today

June U.S. FED Interest Rate Decision and Inflation Data in Major Market Agenda Today

Data agenda is quite heavy today.

In U.K. Unemployment Rate to be announced and it is expected to remain flat at 4.6% compared to a month ago.

Among data releases in US, retail sales and inflation data will be quite important. As inflation is one of the two pillars of Fed’s dual mandate, market will seek a hint out of next Fed moves. Inflation is expected to ease to 2.0% from 2.2% a month ago. Core inflation on the other hand is expected to remain flat at 1.9%. Deceleration in headline inflation may prompt investors to price lesser rate hikes from Fed hence push DXY and bond yields lower. Conversely, a higher than expected realization would drive up market concerns.

Retail sales which is widely followed by markets to assess domestic trade activity in US will be announced at the same day at the same time with CPI inflation. Core retail sales which exclude automobile and gas is expected to post 0.2% growth in May over previous month, lower than the previous month’s 0.3%.  Such realization would have no market impact. Retail sales may remain secondary due to inflation.

The U.S.Crude oil stocks will be announced by EIA on may be important for oil prices which followed a volatile course in the recent few weeks. Expectation that oil stocks declined by 2.955 million barrels in this week.

June FOMC meeting today that is almost certain to generate a rate hike decision will shape market. Question is now how Fed’s moves will evolve thereafter, in what pace and in what frequency and whether Fed Governors will provide a concrete guidance about the balance sheet shrinkage. Three rate hikes this year is almost totally in prices but four rate hike expectations, though unlikely, or a possible timing for balance sheet squeeze may create excessive volatility in global financial markets. Larger paces should also not be ruled out although investors are attaching lower probability for 50 bps hikes, mainly due to lower than expected labor market data and other growth indicators.

14 Jun 17 (Wed)

06:17 am



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