News & Analysis

Stocks mixed after Summit – Attention moves to FED meeting – USD strengthens after CPI hits target

Jun 12, 2018 | Daily Market Outlook

Upcoming high impact news:

12:00 AUD RBA Gov Lowe Speaks
18:30 GBP CPI
22:30 USD PPI
00:30 OIL Crude Oil Inventories
04:00 USD FOMC Economic Projections – FOMC Statement – Federal Funds Rate EXP increase 2.00% – FOMC Press Conference

U.S markets closed mixed overnight, the Dow Jones ticked slightly lower losing 1.58 pts while the S&P500 added 4.85 pts and the NASDAQ closed 43.87 pts higher. Tech continued to see most trader and investor interest. The Korean Summit was yesterday’s key factor. No major breakthroughs had been expected from the meeting, which culminated in both leaders signing a statement that pledged a lasting “peace regime on the Korean Peninsula.”

CPI data came in at 0.2% and Core CPI increased to 0.2%. Traders will be looking to tomorrow mornings FED meeting. Rates are expected to increase by 25 basis points to 2.0% the focus is on whether the central bank will hint at raising rates a total of four times in 2018.

European stocks finished lower, the FTSE losing 33.62 – the CAC 20.54 and the DAX just ticked into the red -0.61 pts. The main focus for investors during Tuesday’s session was an accord between North Korea and the U.S., which hopes to work toward complete denuclearization. retailers led the gains with H&M jumping some 5 percent and Carrefour popping over 3 percent. Casino Guichard meanwhile closed up 1.76 percent.

Wages rose at a slower pace in the three months to April in the UK. Total earnings, including bonuses, saw a jump of 2.5 percent annually, down from 2.6 in March.

Oil was little changed by the close but had a session high of 66.59 before buyers lost steam and price returned below 65.50. OPEC warned there’s a high degree of uncertainty hanging over the global oil market this year. Saudi Arabia reported that the country increased oil output to a little more than 10 million bpd in May. OPEC holds its next meeting on June 22-23 and is expected to decide on future supply policy.

The USD closed higher amid broad expectations the Federal Reserve will announce rate hikes on Wednesday following its quarterly meeting. “Were eagerly awaiting the Fed, the ECB and the BOJ, in that order. People are reluctant to do a whole lot ahead of that,” said Gregory Anderson, global head of FX strategy at BMO Capital Markets in New York. The ECB meets on June 14, when it could signal intentions to start unwinding its massive bond-purchasing program.

The AUD and EUR saw decent falls to the USD overnight, the USDCAD tested 1.3010 resistance before settling back around that level. The USDJPY added 33 pips, the other majors gained to the Japanese Yen as it continued to be shunned by buyers. Gold fell to a firmer USD, traders looking to the coming FED meeting. Price closed 4.10 lower and continues to trade in a daily range.

Good trading from Eightcap.

Sources; CNBC All times are AEST

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