ECB Policy Meeting: More Rate Hikes to Come

An inflation peak is not enough for central banks to stop raising interest rates. The Reserve Bank of Australia and the Bank of Canada resumed their rate hike strategy unexpectedly last week for the sake of their inflation target, having previously pledged a pause. The European Central bank (ECB) could follow suit on Thursday at 12:15 GMT, but the announcement might not surprise investors, with guidance on future rate increases likely attracting the most attention.

Sunset Market Commentary

ECB’s April Consumer Expectations’ Survey results caught investors by surprise. Although outdated, they managed to nonetheless trigger a market reaction as consumer inflation expectations decreased significantly, reversing most of the increases seen in Q1 this year.

Is a Big Oil Slump Brewing?

Oil started the week with a 2.5% jump, picking up on news of Saudi Arabia’s surprise decision to voluntarily cut production by 1M BPD. In addition, OPEC+ agreed to Russia’s production cut from next year.

First Impressions: Australian Q1 GDP

Australia’s economy grew by a tepid 0.2% in the quarter. Consumer spending remains soft, up 0.2%, with high inflation and higher interest rates leading to a fall in real household disposable income, down 0.3%. Domestic demand rose 0.6%, led by business investment and public demand.

Lira Opens Its Eyes in a Dark Post-Coma Room

The Turkish lira is back to running from record low to record low. The dollar-lira is up by almost 15% since mid-May, and more importantly, it looks like the central bank’s efforts to fight a stronger dollar is either fading – after Erdogan’s victory in the latest elections – or keeping the lira steady is becoming more difficult and increasingly expensive for the Turks.

Weak Global Trade Weighs on Chinese Exports, Australian Growth Slows, Oil Slips Further

Chinese trade data offered further evidence of weakening demand both domestically and abroad, with exports falling particularly hard last month. A 7.5% decline far exceeded the -0.4% expected, while imports actually beat forecasts, albeit while also falling 4.5% in May.

Cryptocurrencies Struggle to Stay Afloat

The cryptocurrency market is up 2.7% to $1.121 trillion, approaching the middle of its trading range for the past month. Strong growth momentum late on Tuesday allowed for a brief recovery of capitalisation lost after news of SEC actions against Binance and Coinbase.

AUD/USD Rises to 1-month High, Shrugs Off Soft GDP

The Australian dollar has extended its rally on Wednesday. AUD/USD is trading at 0.6689, up 0.28%. Today’s weak GDP report and soft Chinese trade data haven’t spoiled the party, as the Australian dollar is up 1.2% this week.

China's Weak Foreign Trade Spurs Further Yuan Weakening

Further signs of a slowdown in China came from the trade balance. The foreign trade data published in the morning was noticeably weaker than expected. Dollar-denominated exports fell by 7.5% YoY despite a more than 4.5% weakening of the Chinese yuan against the dollar during this time.

Sunset Market Commentary

We kick off today with the Turkish lira, in a separate bullet for the occasion. It’s as if the floor beneath it simply evaporated. TRY tanks about 7% against the US dollar and the euro to new record lows of USD/TRY 23.10 and EUR/TRY 24.92. This is however not part of an all-out Turkish asset crash. Stocks are easily rising 3% today. The Borsa Istanbul 100 since end May skyrocketed a stunning 25%.