SHANGHAI, Jun 16 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.
The dollar edged higher to a one-month high against a basket of currencies on Tuesday, aided by data showing inflation speeding up, and as traders awaited the Federal Reserve’s two-day policy meeting for hints of plans to start tapering its bond purchases.
Data on Tuesday showed US retail sales fell more than expected in May, with spending rotating back to services from goods as vaccinations allow Americans to shake off COVID-19 restrictions.
But robust demand is outpacing supply, stoking inflation, with producer price index for final demand increased 0.8% last month after rising 0.6% in April.
So far Fed officials, led by Chair Jerome Powell, have said rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time.
However, recent economic data has raised concerns that price pressure could force an earlier stimulus withdrawal.
On Wall Street, US stock index futures were little changed during overnight trading on Tuesday, ahead of the Federal Reserve’s update on Wednesday.
Futures contracts tied to the Dow Jones Industrial Average were flat. S&P 500 futures were also flat, while Nasdaq 100 futures advanced 0.1%.
Stocks pulled back from record levels during Tuesday’s trading session, with the S&P 500 closing 0.2% lower after hitting an all-time high earlier in the day. The Dow slid nearly 100 points and the Nasdaq Composite dipped 0.7% amid weakness in shares of Big Tech.
The Federal Reserve kicked off its two-day meeting on Tuesday. The central bank is not expected to make any policy moves, but it could signal that it’s beginning to think about easing its bond-buying policy.
Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.
Brent crude settled 1.55% higher at $72.12 per barrel, having risen 0.2% on Monday. US oil advanced 1.75% to settle at $72.12 per barrel, having slipped 3 cents in the previous session.
Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union.
A US return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.
Gold fell on Tuesday as the dollar firmed and as markets weighed the chances that the US Federal Reserve this week may signal an eventual easing of stimulus.
Spot gold fell 0.5% to $1,855.99 per ounce by 1:55 p.m. EDT (1755 GMT), while US gold futures settled down 0.5% at $1,856.40.
“There’s growing nervousness about rising inflation and the feeling in precious metal markets is that central banks have to start to respond a bit more aggressively to these inflationary pressures,” ED&F Man Capital Markets analyst Edward Meir said.
Meir said while gold could face a “short-lived” setback if the Fed begins tapering by end-2021 or even hints at it on Wednesday, bullion will likely be bought “on the dips” on concerns over rising inflation.
European stocks closed in positive territory on Tuesday as investors awaited the start of the US Federal Reserve’s latest monetary policy meeting.
The pan-European Stoxx 600 added 0.15% by the close, with chemicals and insurance stocks climbing 0.8% while basic resources dropped 2.3%.
The Federal Reserve’s two-day policy meeting, which starts on Tuesday, is a focal point for the markets this week. The central bank is not expected to take any action, however, commentary on interest rates, inflation and the economy could drive market moves and there will be close attention to comments on the Fed’s eventual tapering plans.