Forex Top Team

June FOMC Expected to Stay Unchanged, But Still Fluid Ahead of US Employment Data

Yesterday, market sentiment shifted towards a majority expectation of the June FOMC remaining unchanged. This change was in response to the support for holding off on rate hikes from a Jefferson Fed Board member and the President of the Philadelphia Federal Reserve, Harker. Prominent Fed watchers had also indicated a possibility of no rate hike. Currently, about 60% of the short-term financial market has priced in a decision to keep rates unchanged.

Today, the US ADP Employment Report and US Unit Labor Costs will be released, and tomorrow the latest US employment data will finally be announced. The current US labor market is showing strength, as seen with the recent JOLTS Job Openings exceeding 10 million. Depending on the results, market expectations regarding the June FOMC are still fluid.

The economic indicators to be released in the later foreign markets include Eurozone Consumer Price Index (Flash Estimate for May), Eurozone Unemployment Rate (for April), Manufacturing PMI Final Figures for France, Germany, Eurozone, UK, and the US (for May), Challenger Job Cuts (for May), US ADP Employment Change (for May), US Non-Farm Labor Productivity and Unit Labor Costs (Revised Figures for Q1), US Construction Spending (for April), and US ISM Manufacturing Purchasing Managers’ Index (for May).

Regarding speeches and events, there will be opportunities for comments from Knot, President of the Netherlands Central Bank, Lagarde, President of the ECB, and Villeroy de Galhau, Governor of the Bank of France. The ECB appears to be gradually reducing its hawkish stance. The market is not easing its expectations for additional rate hikes by the Bank of England, making it easier for Euro selling and Pound buying pressures to emerge. Yesterday, Harker, President of the Philadelphia Federal Reserve, who caused a stir in the market, will deliver a speech on monetary policy and economic outlook at the National Association for Business Economics (NABE) today.

Today, it seems that the EUR is seeing a return in buying interest due to the ECB President’s repeated remarks on continuing rate hikes until inflation is contained.

The USD is likely to be influenced by the results of US economic indicators, but there is a sense of fatigue and a somewhat stagnant phase in the USD’s strength.

It would be opportune to watch the market movements after the release of the US ISM Manufacturing Purchasing Managers’ Index.