Markets are treading water in a typical pre-Federal Reserve session, with answers awaited on the timing of tapering bond-buying and raising rates. Chinese figures, the Biden-Putin summit, and the occasional leap in a small cryptocurrency play second fiddle to the long wait for Fed Chair Powell.
The Fed is set to leave its interest rate unchanged and publish updated forecasts for growth, employment, inflation, and interest rates. Investors are eyeing any hints that the Fed is set to taper down the pace of its monthly bond-buys, currently at $120 billion/month.
Jerome Powell, Chair of the Federal Reserve, characterized rising prices as “transitory,” yet the recent increases could trigger a change of heart. Comments about robust growth and bumpy labor figures will also be eyed. The bank’s interest rate “dot-plot” could show that additional members support raising rates sooner rather than later. Powell will hold a press conference.
Stability: Ahead of the event, markets have been stable, with S&P 500 futures mostly unchanged. EUR/USD is hovering above 1.21 after European Central Bank officials insist on refraining from slowing the pace of its bond buys.
Data: US Retail Sales missed estimates with a drop of 1.3% in May, but on top of an upward revision for April. Producer prices beat estimates on the headline but met the consensus when it come to core data.
GBP/USD is changing hands under 1.41 after plunging on Tuesday. The UK delayed its reopening to July 19 and Brexit issues have yet to be resolved. On the other hand, Britain’s Unemployment Rate surprisingly dropped to 4.7%. Inflation figures for May are due out on Wednesday, with an increase from 1.5% to 1.8% is on the cards.
Summit: President Joe Biden concludes his European tour in Geneva, meeting Russian President Vladimir Putin. Tensions between both countries are set to surface and may cause concerns. Markets are more interested in negotiations between Biden’s Democrats and Republicans back in Washington. The latest reports suggest progress on bipartisan talks on an infrastructure bill.
Copper prices have retreated after new reports of Chinese curbs. China publishes industrial output and retail sales figures later in the day. However, WTI Crude Oil has extended its gains, changing hands above $72. Gold has retreated toward $1,850.
Cryptocurrencies: Bitcoin has been battling the $40,000 level while Ethereum is on the back foot, changing hands at around $2,500. Shiba Inu stands out with a leap of over 20% early on Wednesday.