The European Central Bank’s hawkish stance is expected to continue supporting the EUR/USD currency pair as the Sintra meeting gains momentum. The ongoing discussions at the ECB forum, featuring prominent central bank governors from the Bank of Japan, Bank of England, European Central Bank, and the US Federal Reserve, are highly anticipated. Additionally, there has been a decline in consumer confidence in Germany according to the Gfk Consumer Confidence Index.
The New Zealand Dollar is being affected by diverging monetary policy outlooks. The AUD/NZD has decreased from a significant resistance level, while the GBP/NZD has encountered a major obstacle.
The US Dollar is expected to remain stable before the important European Central Bank (ECB) meeting. There is a possibility of EUR/USD breaking out of its current trading range due to potential market fluctuations caused by the participation of influential figures from the Bank of England (BoE), Bank of Japan (BoJ), ECB, and Federal Reserve in a joint discussion. It is worth noting that these central bankers may not have aligned views, raising the question of whether their comments will impact the EUR/USD exchange rate.
The Australian Dollar experienced a significant decline following the release of monthly CPI data in Australia, which fell considerably below anticipated levels. As a result of this data, expectations for a rate hike by the Reserve Bank of Australia in July have decreased slightly.
In the academic context, it appears that Asian stocks are expected to open positively following the relief in Wall Street. Currently, the Nikkei is up 0.77%, ASX is up 0.45%, and KOSPI is down 0.04%. The Nasdaq Golden Dragon China Index experienced a more than 3% increase, reflecting the strength of Chinese equities in the previous session. Market sentiments are now highly sensitive to any prospects of government stimulus policies as reopening optimism diminishes. Yesterday, reassuring comments from China’s premier Li Qiang regarding a stronger second-quarter gross domestic product (GDP) growth and achieving a 5% growth target for 2023 influenced market cues. However, whether these gains will be sustained depends on concrete details of the policies. The focus today will be on Australia’s monthly Consumer Price Index (CPI) indicator. Despite a surprise rate hike from the Reserve Bank of Australia (RBA), recent minutes suggest that the rate decision was finely balanced, raising some reservations about it. Market participants will be looking for progress in Australia’s inflation fight following an upside surprise in April’s inflation figures. Expectations are for a 6.1% read compared to the previous 6.8%. Matching these expectations may lead to
The price of gold is decreasing as the US Dollar remains uncertain before Powell’s upcoming speech. There is speculation about whether the XAU/USD will decrease further. Gold prices are currently stagnant at recent lows, while the US Dollar is indecisive about its next move. Market indicators of inflation are considering the impact of lower energy prices and higher service costs. The upcoming speech by Fed Chair Powell is anticipated to have an effect on the XAU/USD exchange rate.