This morning and in line with expectations the Federal Reserve raised its official cash rate range by 25 basis points to 1.75%-2.00%, with the accompanying statement viewed as “hawkish.”
Key points from the statement
- Fed sees 2 further hikes in 2018.
- Fed raises inflation forecasts for both 2018 and 2019.
- Fed raises median 2018 GDP forecast to 2.8%.
- Leaves longer-run rate unchanged.
- Household spending has picked up.
- Risks to economic outlook appear balanced.
- Economic activity has been rising at a solid rate.
- Monetary policy remains accommodative.
The USD has strengthened against all its rivals with the NZDUSD falling sharply after touching 0.7050 ahead of the announcement.
Yields on US treasuries advanced following the announcement with 2-year yields posting a 3-week high and compressing the gap between the 2-year and 10-year by 40 basis points its narrowest since march 2010.
UK inflation continues to run at 2.4% according to Office for National Statistics report. The result for the month of May was in line with forecasts.
After recovering in March Euro-zone industrial production declined in April with the Eurostat report showing Industrial output fell 0.9% m/m after rising by an upwardly revised 0.6% in March.
This morning’s Australian employment data will be the main focus during our trading day while later this evening investors will look to the ECB monetary policy statement along with the US retail sales report for direction.
Global equity remain mixed- Dow -0.10%, S&P 500 -0.23%, FTSE -0.00%, DAX +0.38%, CAC -0.01%, Nikkei +0.38%, Shanghai -0.97%.
Gold prices are inching lower, down 0.2% trading at $1,293 an ounce. WTI Crude Oil prices continue to edged higher, up 0.3% trading at $66.40 a barrel.
Current indicative rates:
Upcoming Data releases (NZST):
- 13:30 Australian Employment Report
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