Markets Report - 27 June 2022

A daily breakdown of the markets for the 27th June 2022, provided to you by Sterlex.

🇪🇺💶European stocks climb over 1%, taking the upbeat cues from their Asian and US peers, as investors rethink whether the central banks’ will continue with their aggressive rate-hike track, in the face of slowing economic growth. It’s worth noting that the comments from a German Official suggesting the Group of Seven (G7) leaders’ preparedness for taking moves again Russia's oil and gold seem to recently weigh on the risk appetite. EUR/USD has started the new week on a firm footing. On the same line were comments from the White House saying, “The US is confident that NATO's new strategy document will include "strong" language on China, a White House official said on Sunday, adding that negotiations on how to refer to Beijing were still underway,” per the news from Reuters. EUR/USD is nearing 1.06000, building onto the Asian rebound in the European session on Monday, as positive global momentum continues and weighs heavily on the safe-haven US dollar. The pair could push higher as long as 1.0560 support holds. Additionally, ECB President Christine Lagarde’s opening remarks at the central bank’s three-day Forum in Sintra this week will be closely eyed. The main event risk, however, this week will be the policy debate between the chiefs of the Fed, BOE and ECB at the Sintra Forum on Wednesday.

🇬🇧💷Economists at ING expect the GBP/USD pair to edge higher towards 1.24 amid some respite in equities. Sterling continues to defy some of the more bearish forecasts. This, in turn, should hold back bulls traders from placing aggressive bets and keep a lid on any meaningful gains for the GBP/JPY cross, at least for the time being.

There isn't any major market-moving economic data due for release on Monday, leaving spot prices at the mercy of the broader market risk sentiment. The incoming softer UK economic data have been fuelling fears about a possible recession. Traders will further take cues from the USD price dynamics, which will influence the GBP and contribute to producing short-term opportunities around the GBP/JPY cross. This, along with the social and political unrest, points to further instability in the UK and could force the Bank of England to opt for a more gradual approach toward raising interest rates. Apart from this, the UK-EU impasse over the Northern Ireland Protocol of the Brexit agreement could act as a headwind for the British pound.

🇺🇸 🏦Louis Federal Reserve Bank President James Bullard reiterated that they need to continue to frontload rate hikes to get inflation under control. Pending Home Sales and the Dallas Fed Manufacturing Survey data for June will be featured in the US economic docket as well. The US Dollar Index stays relatively quiet near 104.00 early Monday after having closed the previous week modestly lower. "Based on the median projection for the policy rate published at the June FOMC meeting, we expect the US economy will slow in 2022-23 but narrowly avoid a recession," the IMF noted in its publication. US stock index futures trade flat on the day as focus shifts to May Durable Goods Orders data. The European Central Bank (ECB) Forum on Central Banking will start later in the day with ECB President Christine Lagarde delivering the opening remarks at 1830 GMT.

San Francisco Fed President Mary Daly said she is prepared to support another 75 basis points rate increase in July. Ahead of the weekend, St. Supported by the recent hawkish commentary, the 10-year US Treasury bond yield is up nearly 1% on the day at 3.15%.

Meanwhile, the International Monetary Fund (IMF) said in its annual assessment that the US economic growth expectation got revised lower to 2.9% for 2022 from 3.7% in April's forecast.