English (India)
7
Jun

RBA raises rates by most in 22 years, Treasury secretary Yellen speaks

calendar 07/06/2022 - 08:22 UTC

The dollar index ended Monday moderately higher but continued to gain into the Asian trading hours on Tuesday, with the greenback hitting fresh two-decade highs versus the yen, as concerns about ongoing inflation supported U.S. bond yields. At the same time Japanese yields remain close to zero, as part of the Bank of Japan's yield curve control policy, with central bank governor Haruhiko Kuroda mentioning once more, his plans for a "powerful" monetary stimulus.

In other news, Australia’s central bank earlier Tuesday raised interest rates by the most in 22 years on Tuesday, and also gave indications of more hikes to come to tackle surging inflation. The RBA lifted its cash rate by 50 basis points to 0.85%, higher than the 25 basis points expected.

A recent surge was seen in cryptos early on Monday where Bitcoin crossed the $31k mark, Ethereum moved towards the $1,900 level and Cardano outperformed all major cryptos, crossing the $0.60 level once more. However, some retracement was seen later in the session, with most cryptos giving back a small chunk of recent gains and overall market capitalization failing to remain above the 1.3 trillion mark.

On Tuesday, scheduled fundamental data releases include the Sentix Investor Confidence data from the EU, the Final Services PMI report from the UK while later in the session, US data on Trade Balance and monthly Consumer Credit are due.

On another note, Treasury Secretary Janet Yellen is due to testify on the Fiscal Year 2023 Budget before the Senate Finance Committee, in Washington DC something that may attract market interest for possible signs of policy shifts.

EUR/USD

The euro has seen two consecutive weekly gains against the dollar since mid-May, recovering from a low of 1.0350 to now trade steadily above the 1.07-threshold.

The euro saw some support after Lagarde suggested the central bank should start lifting its deposit rate, currently standing at -0.5%, in July, to reach zero or "slightly above" by the end of September. This move aims to tackle surging inflation in the region as Eurozone CPI was reported at record highs of 8.1% in May.

Fundamental data releases from eurozone on Tuesday include the monthly German Factory Orders that disappointed at -2.7% when forecasts indicated a 0.4% gain while later in the day, the Sentix investor sentiment is due.

EUR/USD

Gold

Gold prices fluctuated between gains and losses on Monday, ending the day marginally lower. Early on Tuesday, the precious metal continues to move deeper into the red, trading at $1843 per ounce as at 07:56 AM GMT, still more than 3% higher from the low of $1787, posted in mid-May.

Last week’s employment data raised expectations of continued interest rate hikes by the U.S. Federal Reserve and now, investors are looking ahead to Friday’s U.S. consumer price index (CPI) for clues on the Fed’s monetary policy path forward.

Gold

WTI Oil

The bullish momentum in oil prices remains, despite last week’s decision by the OPEC+ to increase production by 648 thousand barrels per day, or 50% more than previously planned, as global supply disruptions and an expected demand recovery in China has kept prices elevated.

Beijing and commercial hub Shanghai have been returning to normal in recent days after two months of painful lockdowns to stem outbreaks of the Omicron variant. Traffic bans were lifted and restaurants were opened for dine-in service on Monday in most parts of Beijing.

On Tuesday the American Petroleum Institute (API) publishes its weekly change in terms of crude oil, gasoline and distillate inventories.

WTI Oil

Germany 40

Major stock market indices around the world traded marginally lower on Monday with the focus shifted now on European stock markets, as the ECB meets on Thursday and has been widely expected to make statements on possible rate hikes within the third quarter.

Markets are mostly concerned that policymakers could signal a more aggressive monetary policy path than what was initially outlined by ECB President Christine Lagarde a couple of weeks ago.

Nonetheless, the Germany 40, that tracks the performance of the DAX futures contract, ended Monday 0.84% higher on the iFOREX Europe platform but is currently trading at 0.58% lower as at 7:36 AM GMT

Germany 40

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