Weekly Market Analysis: June 21 - 25, 2021 - Fed Rate vs Market Agenda

This Weekly Market Analysis for June 21-25, 2021 will discuss several factors that influence market movements over the next week. The Greenback continues to strengthen against several other major currencies, after the hawkish announcement by the Federal Reserve or the FOMC meeting early Thursday which caused other pairs to decline and commodities such as Gold to also decline. The good thing is that the US economic data that has been released shows that the US Dollar is strengthening. With this data, Gold has difficulty rising to its highest level, because it is still in a bearish trend. The inflation rate is predicted to continue to rise in the future due to the FOMC meeting which has released its monetary policy. The impact of the increase in the inflation rate has caused the value of long-term bonds / yields to soar while market players' interest in owning Gold has decreased. This influences investors to choose bonds over Gold. The Fed's next agenda will be a reduction in bond purchases and there will be an increase in the benchmark interest rate (Federal Funds Rate/FFR) which will occur sooner in 2023. "Jerome Powell" also said that accommodative policies will continue. In addition, the Fed is also paying attention to the increase in employment and weekly Jobless Claims. EURUSD moved lower for the Euro currency compared to the US Dollar, in trading last Friday. The weakening of the Euro was the impact of a statement by one of the Fed officials "Bullard" whose statement turned out to be more hawkish than the statement of the chairman of the Fed Central Bank "Jerome Powell". The movement of EURUSD also weakened due to physical sales in the Euro currency carried out by market players. For today's market movement, EURUSD is predicted to continue its weakening against the Euro currency. GBPUSD is still moving lower for the Pound Sterling currency against the US Dollar. The weakening of the Pound Sterling was caused by the strengthening of the US Dollar against several other major currencies. In addition, the ongoing lockdown in the UK also put pressure on the Pound Sterling. For today's market movement, it is predicted that the Poundsterling currency will continue to weaken. USDJPY is still moving lower against the US Dollar, in trading on Friday last weekend. The weakening of the Yen against the US Dollar occurred after a statement by one of the Fed officials "Bullard" who was more hawkish than the Fed chairman "Jerome Powell". For today's market movement, it is predicted that the USDJPY currency will still weaken for the Yen currency compared to the US Dollar. AUDUSD moved lower for the Australian Dollar currency compared to the US Dollar, in trading on Friday last weekend. The weakening of the Australian Dollar was the impact of the Fed's statement that it planned to raise interest rates in the near future. For today's market movement, AUDUSD will still weaken for the Australian Dollar currency compared to the US Dollar. Oil prices are predicted to continue to move down, today due to the strengthening of the US Dollar currency. In fact, on Friday last weekend, oil prices actually increased. For today's oil market movement, it is predicted that it will continue to decline. Gold prices continued to decline in trading on Friday last weekend, the drop in gold prices was caused by the approaching opportunity for a Fed interest rate increase. This is after comments from one of the Fed officials from the state "Bullard" who stated that the opportunity for an interest rate hike could be faster than the statement given by Powell. For the movement of the Gold market today in the Asian session, it is estimated that it will still try to continue its decline. The effect of the strengthening US Dollar is the main cause of the plunge in Gold prices. The large decline in Gold prices is related to the reduction in bond purchases by the Fed and the increase in interest rates. The decline in Gold also makes many people anxious and today's Gold price will experience a further decline.

1. Important Data/High Impact Weekly Market Analysis 21 - 25 June 2021

1.1 ECB President Lagarde Speaks (EUR)

Monday, 21.15 WIB. The Head of the European Central Bank "Lagarde" will present her policy views. As the head of the central bank, which controls short-term interest rates, she has a greater influence on the value of European currencies. Market players are watching the influence of the policies that will be taken by the head of the central bank, this is because it often becomes a signal about future monetary policy and will certainly affect price movements in the market. Volatile market movements sometimes occur when the speech of the head of the European central bank, especially regarding instructions on the benchmark interest rate.

1.2 FED Chair Powell Testifies (USD)

Tuesday, 1:00 a.m. WIB. As the head of the central bank, Jerome Powell, who controls short-term interest rates, has a greater influence on the value of the US currency. Market players are watching the policy that will be taken, because it is often used to provide global clues about future monetary policy. The Central Bank chairman's accountability speech usually comes in 2 parts: first he will read a prepared statement (text version), then the committee will hold a question and answer session. Because the questions are not known in advance, this moment can cause very volatile movements in the market.

1.3 French Flash Services PMI & French Flash Manufacturing PMI (EUR)

Wednesday, 14:15 WIB. This data measures the level of the diffusion index based on surveyed purchasing managers in the service sector. This data is also a leading indicator of a country's economic health. If businesses react quickly to market conditions, and the level of purchasing managers will provide a current and relevant view of a company's economic outlook. This data is the result of a survey of about 750 purchasing managers who asked respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. If the data is released above 50.0 indicates industry expansion, below 50.0 indicates contraction. There are 2 versions of this report that are released about a week - Flash and Final. The Flash release, which was first reported by sources in March 2008, is the earliest and tends to have the greatest impact.

1.4 German Flash Manufacturing PMI & German Flash Services PMI (EUR)

Wednesday, 14:30 WIB. German Flash Manufacturing PMI is data from a survey of about 800 purchasing managers in Germany that asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. It is a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers may have up-to-date and relevant insights into the company's economic outlook. Above 50.0 indicates industry expansion, below indicates contraction. There are 2 versions of this report that are released about a week apart - Flash and Final. The Flash release, first reported by sources in March 2008, is the earliest and tends to have the greatest impact. German Flash Services PMI is a Survey of about 800 purchasing managers that asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. It is a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers may have up-to-date and relevant insights into the company's economic outlook. A reading above 50.0 indicates industry expansion, below indicates contraction. There are 2 versions of this report released about a week apart - Flash and Final. The Flash release, which sources first reported in March 2008, is the earliest and tends to have the greatest impact.

1.5 Flash Manufacturing PMI & Flash Service PMI (GPB)

Wednesday, 3:30 p.m. GMT. Data from a survey of about 800 UK purchasing managers asking respondents to rate the relative levels of business conditions including employment, production, new orders, prices, supplier deliveries and inventories. This is a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers may have up-to-date and relevant insights into the company's economic outlook. Above 50.0 indicates industry expansion, below indicates contraction. There are two versions of this report released about a week apart - Flash and Final. The Flash release, first reported by sources in March 2008, is the earliest and tends to have the most impact. The survey of about 800 purchasing managers asks respondents to rate the relative levels of business conditions including employment, production, new orders, prices, supplier deliveries and inventories. This is a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers may have up-to-date and relevant insights into the company's economic outlook. A reading above 50.0 indicates industry expansion, below indicates contraction. There are two versions of this report released about a week apart - Flash and Final. The Flash release, first reported by sources in March 2008, was the earliest and likely to have the greatest impact.

1.6 Flash Manufacturing PMI & Flash Service PMI (USD)

Wednesday, 8:45 p.m. WIB. Data from a survey of about 800 U.S. purchasing managers that asks respondents to rate the relative levels of business conditions including employment, production, new orders, prices, supplier deliveries and inventories. This is a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers may have up-to-date and relevant insights into the company's economic outlook. Above 50.0 indicates industry expansion, below indicates contraction. There are two versions of this report that are released about a week apart - Flash and Final. The Flash release, first reported by sources in March 2008, is the earliest and tends to have the most impact. The survey of about 800 purchasing managers that asks respondents to rate the relative levels of business conditions including employment, production, new orders, prices, supplier deliveries and inventories. This is a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers may have up-to-date and relevant insights into the company's economic outlook. A reading above 50.0 indicates industry expansion, below indicates contraction. There are two versions of this report that are released about a week apart - Flash and Final. The Flash release, first reported by sources in March 2008, was the earliest and likely to have the greatest impact.

1.7 Asset Purchase Facility, MPC Asset Purchase Facility Votes, & Monetary Policy Summary (GBP)

Thursday, 18:00 WIB. Asset Purchase Facility is data that will look at the total value of money that will be created and used by the BOE to buy assets in the open market. Where MPC members vote on the total amount of money to be created for the program. Individual votes are published 2 weeks later in the MPC Meeting Minutes. This data is used to increase demand for bonds which usually leads to lower long-term interest rates. MPC Asset Purchase Facility Votes are the results of the BOE MPC meeting containing asset purchase votes for each MPC member during the last meeting. The vote details provide insight into which members changed their stance on asset purchases and how close the committee is to enacting changes in future purchases. Monetary Policy Summary This data is one of the main tools the MPC uses to communicate with investors about monetary policy. It contains the results of their votes on interest rates and other policy measures, along with commentary on the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues about future vote outcomes.

2. Technical Review According to Weekly Market Analysis 21 - 25 June 2021

2.1 EUR/USD

2.2 USDCHF

2.3 GBPUSD

2.4 USDJPY

2.5 Gold

2.6 AUDUSD

2.7 Oil

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