Euro Trading Quietly Around 1.09, FOMC Minutes Next

EUR/USD is showing limited movement on Wednesday. In the European session, the euro is almost unchanged at 1.0882.

Sunset Market Commentary

According to the ECB monthly consumer expectations survey, consumers saw inflationary pressures easing. Perceived inflation over the previous 12 months in May decreased to 8.0% from 8.9%.

Yen Hopes for FX Intervention

The Yen has been under pressure, losing 3.5% against the Dollar and over 5.6% against the Euro since the beginning of the month. The EURJPY has risen to its highest level since September 2008. The USDJPY is trading above 143.50, where the intervention took it in October and November last year, and close to the 1998 turning point.

Strong Data and Soft Inflation Boost Appetite

The Australian inflation fell to a 13-month low, and the Canadian inflation fell more than expected, in a sign that the central bank efforts to pull prices lower is paying off. The AUDUSD was sharply sold below its 50-DMA which stands near the 0.6680 level, while the USDCAD rebounded off a fresh low since September on the back of soft inflation and a 2% fall in crude oil prices.

Near-Term Recession Fears are Clearly Overdone

Consumers showed more optimistic on growth but anticipate less income in coming months and scaled back spending on big-ticket items. So near-term recession fears are clearly overdone, but a slowdown is still in the making. This creates space for the Fed to implement its June plans to hike at least once and likely twice.

China's Booster from Premier Li Qiang May Not Last

China’s Premier Li Qiang, also the Head of the State Council that directs economic policies in China used his keynote speech yesterday, 27 June during the opening of the World Economic Forum’s 14th Annual Meeting of the New Champions in Tianjin to smooth out fears of a significant impending economic slowdown in the second half of 2023.

Ethereum's Downward Bias

Ethereum is trading in a corridor with a slight bearish bias, correcting 4% from its 22 June high to $1860. The development of a corrective pullback here sets the stage for a decline to the $1800-1810 area. A critical round level and the 61.8% line from the last rally to the 50-day moving average are concentrated here.

Aussie Slides to 3-Week Low as CPI Falls Sharply

Australia’s inflation was expected to fall in May, but the decline was sharper than expected. Headline CPI tumbled to 5.6% y/y in May, down from 6.8% and below the consensus of 6.1%. Inflation has now dropped to its lowest level in 13 months. Core inflation also fell, as Trimmed Mean CPI declined to 6.1% y/y, down from 6.7%, the lowest level in seven months.

All Eyes on ECB Forum as Central Bank Heads Join Panel Discussion

Fed Chair Jerome Powell, ECB President Christine Lagarde, BoE Governor Andrew Bailey, and BoJ Governor Kazuo Ueda are due to take part in a panel discussion at the ECB Forum on Central Banking around the opening bell in the US and their comments could set the tone for the rest of the day.

Yen Weakness: When Will BOJ Intervene?

Overnight, the USDJPY rose to the 144 handle which it hadn't seen since November of last year. This new weak point in the Japanese currency is just the latest in a long trend that has been going on since April. That's when markets came to the conclusion that the new head of the BOJ was actually serious about keeping easing policy in place.