On the day:

• S&P 500 3.0%
• Nasdaq +3.2%
• Russell 2000+3.0%
• DJIA +2.6%

On the week:

• S&P 500 +6.4%
• Nasdaq +7.5%
• DJIA +5.4%

Last week was the worst one for US stocks since March 2020 but this week all those declines were wiped out.

This article was written by Adam Button at www.forexlive.com.

• If supply continues to fall short and inflation stays high, we will need to do more, if not we can do less
• Likely to be some slowing in economy but not a recession
• We have the tools to bring down inflation, it’s our number one priority
• How much additional tightening depends on factors beyond the Fed’s control

This article was written by Adam Button at www.forexlive.com.

The S&P 500 has extended to its best levels of the day as trading winds down for the week. It’s been an impressive rebound in a holiday-shortened US trading week.

Today’s gain has pushed the index into the mid-June gap.

This article was written by Adam Button at www.forexlive.com.

WTI crude oil climbed $3.35 to settle at $107.62 while brent finished the week at $113.12.

Both are lower compared to last Friday’s close and that’s the second week in a row of declines but it follows a streak of seven consecutive weekly gains.

Overall, crude is right in the middle of the range since the outbreak of the Ukraine war and the bulls should be encouraged by that given the recession fears, the OPEC+ increase and the SPR release.

As for OPEC+, they will meet again on Thursday but a report this week citing five sources indicated the status quo. A bigger question is what happens beyond August when the scheduled increases run out. Nigeria has been underproducing but said it hopes to have its oil online quickly. Libya’s production is inconsistent. Hopes for an end to the Iran nuclear deal are nearly non-existent.

For me, the dominant feature on the chart is the series of higher lows that’s intact so long as crude stays above $95. The buying interest today shows ongoing tightness in the physical market but a sharp economic slowdown could reverse that in the months ahead.

This article was written by Adam Button at www.forexlive.com.

• Lower growth, higher inflation will follow in the months ahead
• Inflation to start declining in Q4 this year
• Main concern is second round effects of inflation
• A wage price spiral will be very detrimental for the economy

Just some token remarks there by de Guindos but once again it just reaffirms the narrative that central banks are continuing to kick the can down the road when it comes to the timeline of getting inflation „under control“.

This article was written by Justin Low at www.forexlive.com.

• Frontloading rate hikes is a good idea in this situation
• It means that we can stop inflation before it becomes entrenched
• Would like for rates to move up to 3.50% by year-end

Central banking these days have never really been about going „according to plan“. Remember when policymakers were telling us that inflation was just ‚transitory‘? The last echoes of that sentiment wasn’t even a year ago. Pfft.

This article was written by Justin Low at www.forexlive.com.

• Households have much savings from the pandemic
• No sign from households that they are pulling back on spending meaningfully
• Labour market is very strong
• Rate hikes will slow down the economy but only slow it down to trend growth
• There will just be a moderate slowdown in the economy, not a major one
• It will be unusual to return to a recession unless there is a big shock
• We are not even near neutral rate yet to control inflation, so too early to talk about recession probabilities

There isn’t anything here that suggests that he is on the same page as Powell about demand destruction and he is certainly going out of his way to reassure that a recession isn’t imminent in the US.

This article was written by Justin Low at www.forexlive.com.

• Australian economy is remarkably resilient
• The challenge is to bring down inflation painlessly

Just some token remarks by Lowe in a speaking engagement. After delivering some rather unorthodox rate hikes recently, it will be interesting to see what the RBA will go with next on 5 July.

This article was written by Justin Low at www.forexlive.com.

While the yen stole the spotlight in trading yesterday, the franc continues to do its work steadily following the SNB policy pivot two weeks ago. As mentioned then, the change has definitely shaken up the landscape of the major currencies bloc and puts the franc at among the frontrunners considering the timing of the surprise and how shaky markets look at the moment.

The swissie is the top performer today with USD/CHF itself down 0.5% to 0.9565 while EUR/CHF is testing daily support from the April lows at 1.0088-89 again currently. A firm break below that opens up another shot at parity for the pair and this time there might be more conviction to break that after the attempt in March failed.

• Parity now the new normal in EUR/CHF – Credit Agricole (22/06)
• EUR/CHF: Core target at 0.9830; ‚measured triangle objective‘ at 0.9600 – Credit Suisse (20/06)
• Parity beckons for EUR/CHF (17/06)

This article was written by Justin Low at www.forexlive.com.

Equities are producing a rather solid rebound on the session now with S&P 500 futures climbing by ~27 points to 3,790, or up 0.7%, on the day. That compares with earlier where it fell by ~28 points to 3,735, or down by 0.7%, after the dismal PMI readings from France and Germany. However, the optimistic turnaround is not broad-based as mentioned here.

In FX, the dollar and yen are still holding on to gains mostly. EUR/USD is down 0.5% to 1.0505 with the low earlier touching 1.0485 and testing the 200-hour moving average:

Buyers are holding on to that for now with large expiries at 1.0500 perhaps also a factor on the day.

Meanwhile, GBP/USD is down 0.5% to 1.2205 but the low earlier came in near 1.2270 and the pair caught a bounce of some near-term support highlighted here.

Elsewhere, USD/CAD is holding a little higher at 1.2960 – up just 0.1% on the day and AUD/USD is down 0.5% to 0.6890 with sellers not letting up just yet despite the turn in the risk mood.

This article was written by Justin Low at www.forexlive.com.