Today, there is a focus on the US Federal Open Market Committee (FOMC). Following the release of the US Consumer Price Index (CPI) yesterday, over 90% of the market has already priced in a decision to keep rates unchanged in today’s meeting. However, given the resilience of the core index, rate hike expectations for July remain dominant. Ultimately, the CPI did not lead to significant changes in market perceptions regarding the FOMC.
Today, the FOMC members’ interest rate projections will be released. The market expects an upward revision to the projections, which could strengthen rate hike expectations beyond July. Additionally, there will be a press conference with Fed Chair Powell. While inflation has shown signs of slowing down, it remains far from the 2% target. Therefore, it is expected that the focus will be on continued tightening measures for inflation control. Market participants will likely be sensitive to any statements regarding the current analysis, as the stance is data-dependent. Interest rate announcements and other updates will occur at 3:00 AM Japan time, followed by Powell’s press conference at 3:30 AM.
Ahead of the FOMC, the US Producer Price Index (PPI) for May will be released in the US. The decline in producer prices tends to outpace consumer prices. The headline figure is expected to be -0.1% on a monthly basis and +1.5% on a year-on-year basis. The expectations for the core index are higher, with a monthly increase of +0.2% and a year-on-year increase of +2.9%. Unless the results are extreme, the market reaction is likely to be less significant than during the CPI release.
Considering the results of the US CPI released yesterday, we have assessed a USD selling sentiment. However, it’s important to note that the release of the Producer Price Index (PPI) may also have an impact on the USD movement. Nevertheless, since the PPI tends to have lower market attention compared to the CPI, we anticipate that the price movement will be relatively small unless there are extreme results.
Currently, the only position held is a long position on AUDUSD.