Forex Top Team

Fed Chair Jerome Powell’s testimony to Congress in focus; pound sterling ahead of Bank of England tomorrow

Today, attention is focused on the congressional testimony of Powell, the chairman of the Federal Reserve (FRB). This semi-annual testimony takes place today in the House of Representatives and tomorrow in the Senate committee. It is expected that the emphasis will be on the stance of inflation containment. While a message stating that there is no possibility of initiating rate cuts within the year is anticipated, there may also be indications of a cautious shift in the pace of rate hikes, taking into account the developments after each rate hike.

Furthermore, the recently released UK Consumer Price Index came in at +8.7% YoY, surpassing market expectations of +8.4% and remaining at a high level similar to the previous reading. The Core YoY figure even accelerated to +7.1% from the previous +6.8%. With the upcoming announcement of interest rates by the Bank of England’s Monetary Policy Committee (MPC) tomorrow, this inflation data is likely to have a significant impact on the market. The market had largely settled on a 25 basis-point rate hike expectation for tomorrow, but this inflation indicator could potentially tilt the sentiment towards a more hawkish direction. It will be interesting to observe whether there will be a presence of those advocating for a 50 basis-point rate hike and how the MPC members’ votes will be divided.

In terms of economic indicators to be released in the later international markets, they include the South African Consumer Price Index (May), US MBA Mortgage Applications (06/10 – 06/16), Canadian Retail Sales (April), and Brazilian Central Bank Policy Interest Rate (June), among others.

Regarding speaking events, in addition to Chairman Powell’s testimony mentioned above, there are scheduled speeches by ECB officials such as Kascak, the Governor of the National Bank of Slovakia, Schnabel, a member of the ECB’s Executive Board, and Nagel, the President of the German Bundesbank. In the US, Goolsbee, the President of the Chicago Federal Reserve, will attend an event. The Senate Banking Committee will hold hearings for the nomination of Vice Chair of the Federal Reserve Jefferson and the re-nomination of Cook as a Federal Reserve Board member, as well as for the nomination of Kugler as a Federal Reserve Board member. The Bank of Canada meeting minutes (held on June 7th) will be published, and there will be a US 20-year bond auction ($12 billion).

Today, it is expected that there may be movement in the USD depending on the outcome of Chairman Powell’s congressional testimony. However, separate from that, the EUR has been consistently attracting buying interest and giving a resilient impression.

From here, I entered a long position on EUR/AUD earlier.

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