The high point of a rather unusual day (half a trading session on Wall Street on the eve of Independence Day celebrations) came at 8 p.m. (and not 10 p.m. as usual) with the FED’s ‘minutes’.
The ‘message’ of the mid-June deliberations resembled word for word those pronounced the day before by Jerome Powell from Cintra.
The Fed boss, who along with Christine Lagarde is attending the ECB’s annual forum in Portugal, reaffirmed that while inflation had made “progress”, its decline needed to be confirmed in order to “give more confidence that price increases are slowing before we start easing monetary policy”.
FOREX reacted little to the 8 p.m. press release, as no new elements emerged.
The ‘minutes’ confirm that the FED is ‘torn between the fear of cutting rates too quickly and the fear of waiting too long’.
The dollar fell sharply on Wednesday, by -0.35% to 105.35 for the ‘$-Index’- after the publication of the ADP (Automatic Data Processing) report on job creation in the US private sector, which generated only 150,000 new hires last month, a number slightly below economists’ expectations and down for the third month in a row.
US industrial orders contracted by 0.5% in May 2024, after rising by 0.4% in April (revised from an initial estimate of +0.7%).
The Commerce Department reports that US industrial shipments fell by 0.7% in May compared with the previous month.
Finally, with inventories up by 0.2%, the inventory-to-shipments ratio rose from 1.46 to 1.47 month-on-month.
There were a few signs of resilience, however, with anticipated growth in the US private sector (final estimate) accelerating slightly more than initially estimated in June, according to S&P Global’s composite PMI index, which came in at 54.8 in final data, compared with 54.6 in flash estimates and 54.5 for the previous month (production growth accelerated).
The ‘services’ index thus reached its highest level since April 2022, with a renewed rise in employment.
The greenback gave up -0.35% against the Euro, which climbed to 1.0785, after gaining +0.6% and peaking at 1.0815 around 4.15pm (its best mark since June 13).
The Dollar lost virtually nothing against the Yen at 161.75, the Japanese currency having reached a new 38-year low of $162, but was down -0.25% against the Swiss Franc at 0.9030.
The Euro stalled after testing 1.0800 following the release of a -0.2% decline in producer prices in the Eurozone in May, mainly due to the sharp drop in energy costs, according to data published Wednesday by Eurostat.
Energy costs alone fell by 1.1% month-on-month.
On an annual basis, i.e. compared with May 2023, industrial producer prices fell by 4.2% in the euro zone.
In the European Union as a whole, industrial producer prices fell by 0.3% in May, following a 0.7% decline the previous month (over 1 year, producer prices fell by 4% in the EU).
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