The FOMC still on track to raise rates in June

Yesterday’s markets

25th May 2017

  • EUR - ECB President Draghi Speaks
  • CAD - BOC Rate Statement
  • USD -Crude Oil Inventories: -4.4M

The FOMC look likely to raise interest rates at their next meeting scheduled in June, with last nights minutes suggesting that such a rise would “soon be appropriate”. The Greenback strengthened initially on the back of this news. However, retraced its gains soon after, as there are signs from recent speeches that the committee is beginning to divide over inflation signs. Overall, markets are almost certain the Fed will raise rates in June and a small bout of Dollar strength yesterday reflected that.

In the UK, Prime Minister Theresa May has said she will leave the G7 meeting in Sicily a day early. May will return to the UK to assist in the race to prevent further terrorist attacks from the same network behind the Manchester suicide bombing.  British security forces are still hunting other members of the terror network they believe collaborated with the bomber Salman Abedi. May will also tackle Trump over evidence leaks, as the New York Times posted photos showing debris from the attack.

China received some bad news yesterday. Leading credit agency Moody’s cut its rating on Chinese debt from Aa3 to A1. Moody’s warned of a “material rise” in economy-wide debt, therefore hindering the state’s finances.  The Yuan weakened against a basket of currencies as it received its first reduction in rating since 1989.

Today’s markets

24th May 2017

  • GBP - Second Estimate GDP q/q
  • ALL - OPEC Meetings
  • USD - Unemployment Claims

Today is the bi-annual OPEC meeting. The OPEC represent 40% of the world’s oil, thus have a high control of the supply. Any shifts in the production levels from members can significantly impact oil prices and therefore contribute to increased inflation rates.

In the UK, the second estimate GDP figure will be released. It is the second of three releases of the GDP for the first quarter of 2017, meaning it often has a lower impact on the market than the first reading. However, if the released rate does differ from the expected, it will have a stronger impact on the market.

Across in the US, today sees the release of the weekly unemployment claims figure, which has registered better than expected for the last three weeks. Also, the FOMC Member Lael Brainard will be speaking at a panel discussion which audience questions are expected.