Macro Roundup (Jun 17)

SHANGHAI, Jun 17 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar jumped against a basket of currencies on Wednesday after the Federal Reserve brought forward its projections for the first post-pandemic interest rate hikes into 2023, citing an improved health situation and dropping a longstanding reference that the crisis was weighing on the economy.

The dollar index, which tracks the greenback against six major currencies, was up 0.41% at 90.901, its highest since May 7.

The central bank was widely expected to acknowledge the first conversations among its policymakers about when and how quickly to pare back the massive bond-buying program launched in 2020, but most investors think the Fed will refrain from any hints of starting tapering its stimulus in the near future.

Market participants will be listening to the news conference after the Federal Open Market Committee (FOMC) meeting for any change in tone from Fed Chair Jerome Powell about whether inflation is likely to be temporary or longer-lasting.

On Wall Street, stock futures dipped slightly in overnight trading after the Federal Reserve raised inflation expectations and forecast rate hikes as early as 2023.

Futures on the Dow Jones Industrial Average fell 59 points, or 0.17%. S&P 500 futures edged 0.27% lower and Nasdaq 100 futures shed 0.43%.

US stocks fell during Wednesday’s regular session after the Fed’s initial statement and economic projections. The Dow Jones Industrial Average closed the day 265 points lower to 34,033.67. The blue-chip average dropped as many as 382 points during the day. The S&P 500 edged 0.5% lower to 4,223.70. The Nasdaq Composite dipped 0.2% to 14,039.68.

Markets rallied off their intraday lows after Fed Chair Jerome Powell said projections for future rate increases should be “taken with a big grain of salt” and reiterated that he believes that inflation is transitory.

Oil prices rose for a fifth day on Wednesday, closing in on $75 a barrel as US refiners drew more crude inventories to ramp up activity and meet recovering demand.

Crude inventories fell by 7.4 million barrels in the week to June 11, the US Energy Information Administration said, as refining utilization rose to 92.6%, highest since January 2020, before the pandemic hit.

The inventory draw was stronger than expected, driven as well by exports in another signal of improving demand worldwide.

Brent crude gained 40 cents, or 0.5%, to hit $74.39 a barrel, reaching its highest since April 2019, and running its gains to five straight days. US crude rose 3 cents to $72.15, after reaching $72.99, highest since October 2018.

Gold prices slipped over 1% on Wednesday after U.S Federal Reserve officials brought forward projections for the first post-pandemic interest rate hikes into 2023.

Spot gold fell 1.1% to $1,839.06 per ounce, having earlier hit its lowest level since May 14 at $1,833.65.

US gold futures settled up 0.3% at $1,861.40.

European stocks closed slightly higher on Wednesday as markets await the outcome of the US Federal Reserve’s policy meeting.

The pan-European Stoxx 600 provisionally ended up 0.3%, with most sectors and major bourses in positive territory. Travel and leisure stocks led the gains, adding 1.3%, while the banking index fell 0.8%.