Comments from some Fed members stressing that inflation is not yet beaten have raised expectations that July's expected hike may not be the last in the current tightening cycle.
➡️ Several FOMC members commented that inflation has not yet been completely suppressed and that it is possible that the Fed will have to do more than another rate hike within its ongoing cycle of tightening. This could help the US dollar stabilize today. However, the consensus remains that there will only be one more increase, at this month's Fed meeting, of 0.25%.
➡️ Previously released Chinese GDP data showed weaker-than-expected economic growth, at 6.3% when a rate of 7.1% was expected. However, stock markets in Asia remain mixed to bullish, with the Hang Seng Index rising on the day.
➡️ On Friday we saw stock markets sharply higher and the US dollar index at a 1-year low, while the EUR/USD and GBP/USD currency pairs rose to new 15-month highs. Major stock market indexes see big increases, with both the NASDAQ 100 Index and S&P 500 Index hitting new 1-year highs. The outlook is bullish for risk assets and bearish for the US dollar as there is now a stronger expectation of further US rate hikes and trend traders will be positioned in these directions.
➡️ In the Forex market, there has been very little directional movement compared to today's Asian session, but the Japanese Yen has been the strongest major currency so far today, while the Australian Dollar has been the weakest.
➡️ There will be a release of the US Empire State Manufacturing Index later today.
➡️ There will be a release of the RBA monetary policy meeting minutes later today.
Credit by DailyForex.com