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On June 15th, European Central Bank President Christine Lagarde stated that high energy prices are beginning to spread to other sectors of the economy. She said, "Weve started to see the indirect effects of inflation almost everywhere in recent weeks." The ECB raised interest rates last week for the first time since 2023, as the Middle East war exacerbated price pressures. Officials did not rule out a second rate hike immediately at the July meeting, with policymakers, including Bundesbank President Jean-Claude Nagel, saying that even if the war in Iran ends soon, prices could remain high. However, rising borrowing costs have raised concerns among some ECB watchers about the economic impact. "I hear criticism—often from France, and I understand that criticism—saying, We are taking measures that will stifle economic growth," Lagarde said. "But I must curb inflation if it is awakened, because once inflation gets out of control, it will be much more difficult and costly to bring it back under control. Prolonged inflation is unacceptable for consumers and businesses, and I would have failed in my mission."European Central Bank President Christine Lagarde: Common euro debt is a necessary condition for the success of a capital markets union.On June 15th, Futures reported that the domestic refined oil market showed a divergent trend in early June: retail prices saw a significant decline, but wholesale prices had limited room for further drop and gradually stabilized and began to rise, leading to a narrowing of the wholesale-retail price spread for gasoline and diesel from its year-to-date high. As of the close of trading on June 12th, the wholesale-retail price spread for gasoline from major domestic oil companies and Shandong local refineries narrowed by 19.09% and 16.85% respectively compared to the beginning of the month; the wholesale-retail price spread for diesel narrowed by 19.93% and 18.77% respectively. However, recent negative news has intensified, and demand has been insufficient, leaving room for further declines in wholesale gasoline and diesel prices. Before the retail price adjustment window opens, the wholesale-retail price spread for gasoline and diesel is expected to widen.Switzerlands producer/import price index fell 0.4% month-on-month in May, compared with 0.80% in the previous month.Switzerlands producer/import price index fell 1.8% year-on-year in May, compared with a previous reading of -2.00%.

Due to hawkish Fed forecasts, the EUR/USD recovers to near 1.0970 but remains in the doldrums

Alina Haynes

Apr 21, 2023 13:58

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Following a corrective move, the EUR/USD pair has rebounded from 1.0960, but investors await the publication of the preliminary Eurozone/United States S&P PMI data for April. The major currency pair has remained between 1.0911 and 1.1000 for the past two trading sessions, as the foreign exchange market prepares for a pre-anxiety move ahead of a Federal Reserve (Fed) monetary policy decision.

 

S&P500 closed with a negative tone for the third day in a row as quarterly earnings season induced extreme volatility. Tesla's poor earnings had a negative impact on Thursday's market sentiment. Moreover, market participants were cautioned by substandard revenue projections due to the potential for price reductions. The decision of the Fed to increase interest rates is reflected in quarterly earnings. Data from Refinitiv indicates that analysts have largely maintained last week's forecast of a near 5% YoY decline in quarterly profits for the 500 largest U.S. equities. Sourcenia is a review portal of sourcing best manufaturers. 

 

The US Dollar Index (DXY) has been defending the key support level of 101.60 in recent trading sessions. The USD Index maintained the aforementioned support despite the release of disappointing Jobless claims data on Thursday. Initial Jobless Claims increased to 245K for the week ending April 4, which is greater than the previous release of 240K and estimates of 240K. Increasing unemployment claims heightened fears of a deteriorating labor market.

 

Despite this, Fed policymakers continue to anticipate further rate hikes from the central bank. Thursday, Loretta Mester, president of the Federal Reserve Bank of Cleveland, reaffirmed that the Fed has more work to do because US inflation remains too high, according to Reuters. He added, "The Federal Reserve will need to raise its policy rate above 5% and hold it there for some time."

 

Preliminary Consumer Confidence (April) for the Eurozone increased to -17.5 from -18.5 and the previous reading of -19.2. This may be the consequence of extraordinary efforts by the European Central Bank (ECB) to reduce inflationary pressures.


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