Economic Data Keeps the Markets Busy: Most Important Over the Past 24 Hours

Jun 16 2016, 5:45 am
Economic data

It has been a busy few hours since late yesterday evening after the Fed’s meeting got the ball rolling. The yen is currently the strongest performing currency, up 1.71% while the sterling is the weakest, down 0.26%.

Here’s a quick recap of the important events over the past 24 hours.

FOMC leaves interest rates unchanged

The Federal Reserve, at the conclusion of its two-day policy meeting, decided to leave the Fed funds rate unchanged at 0.50% as expected. The Fed, in its rate hike projections, maintained that it expects to hike rates twice in 2016, but analysts remain doubtful and expect to see only one rate hike in 2016. In her press conference, Janet Yellen did not specify any details on the timing of future rate hikes, noting that rate hikes will be gradual and cautious. The Fed’s economic projections show that the central bank forecasts US growth to average at 2.0% this year. The dollar weakened on the Fed’s rate decision.

Bank of Japan keeps policy on hold

As widely expected by many, the Bank of Japan opted to leave its monetary policy unchanged. BoJ officials voted 8-1 to leave the interest rates and the annual monetary stimulus purchase program unchanged. The yen strengthened sharply on the news sending the US dollar below 105yen on the news. BoJ said that it expects growth to continue rising at a moderate pace but cautioned that near-term inflation could either fall to zero or below.

BoJ Governor Kuroda is expected to hold a press conference within the hour.

New Zealand GDP

Statistics New Zealand released the quarterly GDP data a few hours after the FOMC meeting. Data surprised to the upside with New Zealand’s GDP rising 0.70% in the first three months of the year.

Australia unemployment rate steady

Labor market data from Australia released by the Australian Bureau of Statistics showed that the Australian unemployment rate remained unchanged at 5.70%. The data was in line with expectations. On the month, the economy added 17,900 jobs in May, rising above forecasts of 15k jobs on the month. However, April’s jobs report was revised lower to show a net gain of only 800 jobs down from previous estimates of 10,600. Most of the job gains came from part-time workers, while full-time jobs remained flat after losing 18,200 jobs in April.

SNB expected to stay on the sidelines

The Swiss national bank will be coming up next later today, but the central bank is expected to hold off from taking any monetary policy decisions at today’s meeting. The 3-month LIBOR rate is expected to remain at -0.75% as a result. However, the SNB chairman, Thomas Jordan is likely to reiterate that the central bank remains ready to intervene in the currency markets to stem the gains in the Swiss franc.

BoE expected to maintain status quo

The Bank of England will also be meeting later today and is expected to make no changes to policy, especially with the UK’s EU referendum vote now 7-days away. The BoE is expected to strike a flat tone and could focus more on the risks of the referendum vote. This week, UK’s inflation numbers released were tame on the month, but the labor market data was solid with the UK’s unemployment rate falling to 11-year lows.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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