GLOBAL FX
The dollar held near a two-week high on Wednesday ahead of the Federal Reserve’s closely-watched policy decision later in the day, supported by a surprisingly dovish European Central Bank and bearish eurozone economic data.The Fed is widely expected to stand pat on monetary policy this time but open the door for an interest rate cut at the next meeting in July.The market has mostly priced in a July rate cut and unless there is a big dovish surprise at the FOMC (Federal Open Market Committee) meeting it is hard to imagine the dollar coming under downward pressure.But there will be a lot to digest at this FOMC, such as the Fed’s views on the economy and prices and Chair (Jerome) Powell’s comments. It is hard to tell which of these factors the market decides to latch on and react to.
India’s monsoon has progressed more slowly than usual after hitting the southern state of Kerala nearly a week late. Monsoon rains have been 44% lower-than-average so far in June, delaying the sowing of summer-sown crops and raising concerns that parts of the country could face a worsening drought.This shortfall could have a major impact on consumer demand, the overall economy and financial markets.
China’s Ministry of Commerce on Wednesday said it will maintain anti-dumping and anti-subsidy tariffs on imports of U.S. distillers grains (DDGS), a cereal by-product of ethanol manufacturing, after completing a review launched in April.The ministry cited potential damage to domestic producers in its decision to retain anti-dumping duties of 24.2-53.7% and anti-subsidy tariffs of 11.2-12% on DDGS products from the United States.
China and the United States are rekindling trade talks ahead of a meeting next week between Presidents Donald Trump and Xi Jinping, cheering financial markets on hopes that an escalating trade war between the two countries would abate.
Boris Johnson, the frontrunner to be Britain’s prime minister, repeated his pledge on Tuesday that he would take the United Kingdom out of the European Union by Oct. 31, saying otherwise the government would face a catastrophic loss in trust.“We must come out on the 31 Oct. because, otherwise I am afraid we face a catastrophic loss in politics,” Johnson said in a televised debate with the other four remaining candidates seeking to be Britain’s next leader.“Unless we do it, unless we get out on Oct. 31 I think we will all start to pay a really serious price.”
Substantial discussions on trade, including reform of the World Trade Organization, will likely take place at a summit of Group of 20 major economies next week in Osaka, a senior Japanese finance ministry official said on Wednesday.
Japan’s exports fell for a sixth straight month in May as China-bound shipments of semiconductor manufacturing equipment and car parts weakened, in a sign of a deteriorating outlook for growth as the trade-reliant economy faces persistent pressure from slowing external demand.
Switzerland’s political system of painstaking consensus-building requires more time to strike a deal with the European Union on a new treaty, Foreign Minister Ignazio Cassis said, suggesting no quick resolution to a potentially damaging log-jam.A tit-for-tat battle over Swiss and EU stock exchanges’ access to investors loomed this week after the Swiss government failed to meet a Brussels deadline to embrace the pact negotiated over more than four years.Even more friction between neutral Switzerland and its biggest trading partner lies ahead if no deal on a treaty that Brussels has sought for a decade emerges by the time the present European Commission’s term ends on Oct. 31.
Gold prices inched lower on Wednesday as hopes of a resolution to the Sino-U.S. trade spat and a dovish European Central Bank lifted riskier assets, while investors awaited the U.S. Federal Reserve’s monetary policy decision later in the day.Spot gold was down 0.1% at $1,345.30 per ounce as of 0547 GMT. U.S. gold futures also declined 0.1%, to $1,349.70 an ounce.
Oil prices extended gains on Wednesday after rising in the previous session on rekindled hopes for a U.S.-China trade deal and on the potential for conflict between the U.S. and Iran in the Middle East after tanker attacks there last week.Brent crude futures were up 3 cents at $62.17 a barrel by 0330 GMT. They rose 2% on Tuesday.U.S. West Texas Intermediate crude gained 12 cents to $54.02 a barrel. The U.S. benchmark surged 3.8% in the last session.