- The US dollar extended its gains ahead of the release of key economic data and the Federal Reserve minutes which are out later this evening. Yesterday’s job openings data showed an increase to 8.14 million from a downwardly revised 7.919 million, which suggests that the labor market, while healthy, has cooled significantly. Traders and investors will monitor today’s ADP private payrolls and weekly jobless claims (released a day early due to tomorrows’ holiday) for any clues on Fridays’ Non-farm Payroll print.
- Speaking in Sintra Portugal, Fed Chairman Jerome Powell yesterday said that the latest economic data suggests that inflation is getting back on a downward path, however he emphasized (yet again) that officials need more evidence before lowering interest rates. Whilst he did not give any insight into the timing of the first interest rate cut, Powell did acknowledge that the central bank has made “quite a bit of progress” in reducing inflation. There are just four more Fed meetings this year with the next policy decision due at the end of this month. One cut is currently pencilled in, with the November or December meeting the most likely for a move.
- ECB President Christine Lagarde yesterday said that the central bank does not yet have sufficient evidence to suggest that inflationary pressures have passed. Speaking in Sintra, she said, “We are still facing several uncertainties regarding future inflation, especially in terms of how the nexus of profits, wages and productivity will evolve and whether the economy will be hit by new supply-side shocks.”
- The Japanese yen lost further ground against the greenback yesterday, with USDJPY hitting a 38 year high for the third day. The pair moved close to 162 with some suggesting that the BoJ may step in to support the currency tomorrow whilst liquidity is low due to the Independence Day holiday, giving Japanese authorities the maximum bang for their buck.
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