Forex news for North American trading on June 16, 2021:
- FOMC decision: Rates left unchanged but median projection shows two hikes in 2023
- The full FOMC statement for June 2021 meeting
- Powell opening statement: Indicators of activity and employment continue to improve
- Powell Q&A: It's clear we're on a path to a very strong labor market
- The FOMCs central tendencies and dot plot for the June 2021 meeting
- Canada May CPI +3.6% vs +3.5% y/y expected
- US May housing starts 1572K vs 1630K estimate
- Biden told Putin how he will respond to specific types of Russian actions
- Putin says Russian and US envoys will be returned
- Saudi oil minister says the cautious approach is paying off
- Weekly EIA US oil inventories -7355K vs -2500K expected
- Canada April wholesale sales +0.4% vs -0.9% expected
- US import price index for May 1.1%% versus 0.8% estimate
Markets:
- Gold down $28 to $1829
- US 10-year yields up 11 bps to 1.57%
- WTI crude down 24-cents to $71.88
- S&P 500 down 23 points to 4223
- USD leads, CHF lags
We had at least three days of waiting and minimal trade ahead of the Fed but all the build-up was worth it as the Fed delivered a big surprise. The anticipation ahead of the meeting was that they might move the dots to show one 2023 hike. Instead it was two hikes and 7 of 18 are now forecasting a 2021 hike.
The market reaction spoke in a big way after the decision with the dollar soaring and continuing to rise when Powell offered little push back. USD/JPY moved to 110.30 from 109.90 in a flash but then added another 30 pips from there.
With trading winding down, it looks like the US dollar will finish at the highs of the day.
Cable fell victim to the dollar rally as it dropped to 1.3995 from 1.4100, which is the first time below the figure since May 9.
The euro will be one to watch in the days ahead as it tests 1.20 once again. So far it's held the line so far after a fall from 1.2125. If that breaks, the May low of 1.1986 is in play.
More broadly, there are some interesting patterns shaping up on the dollar charts. We'll have more on those in the hours ahead.
