Headlines:
- Eurozone May CPI +6.1% vs +6.1% y/y prelim
- ECB's Nagel: We may need to keep raising rates after the summer break
- ECB's Rehn: Future decisions will continue to follow a data-dependent approach
- ECB's Holzmann: If things continue as they are, further action will be needed beyond July
- ECB's Centeno: We must act to control inflation
- ECB's Wunsch: Could hike again in September unless core inflation drops substantially
- Goldman Sachs also now expects ECB to hike rates again in September
- BNP Paribas now sees ECB hiking in September as well
- Japanese yen fails to take comfort from Ueda presser
- BOJ's Ueda: we have not changed policy because Japan's inflation is not sustainable
- BOJ's Ueda: More time is needed to meet 2% inflation target
- BOJ's Ueda says no comment on FX levels
Markets:
- GBP leads, JPY lags on the day
- European equities higher; S&P 500 futures up 0.1%
- US 10-year yields up 1.2 bps to 3.740%
- Gold up 0.4% to $1,965.49
- WTI crude flat at $70.64
- Bitcoin down 0.4% to $25,450
After the dollar plunge yesterday, the action has calmed down somewhat in European morning trade today.
Equities are somewhat steadier and the dollar is also sitting in a bit more of a mixed mood, at least for now. We may see a continuation of things from yesterday later on, but keep in mind that it is quadruple witching in markets today so that might see a bit more volatility in general.
The euro remains firm with EUR/USD just a touch higher at 1.0960, staying in the hunt of 1.1000. The pound is the notable gainer, extending its breakout against both the dollar and yen this week. GBP/USD is up 0.3% to 1.2825 while GBP/JPY is up another 0.9% to 180.75 - its highest levels since 2015.
The yen is failing to take comfort from the BOJ decision today and Ueda's presser didn't really help. Those who are long yen since a few months ago are understandably frustrated, as there has been no evidence of progress towards normalising policy since Ueda took charge in April. The remarks today just adds to that sentiment.
USD/JPY raced higher to 141.40 before keeping around 140.90-00 levels at the moment.
ECB policymakers were out in droves today, reaffirming a July rate hike while keeping the door open for September as well. That is helping to keep the euro somewhat buoyed with regional bond yields also underpinned as such.
