Key US stock indexes failed to build on the success of last Friday on Monday recording slight decline. Today futures on US indices and European equities rallied with gains not exceeding 1%. The FX market is dominated by range-bound moves, the dollar index trades near the opening below the level of 104. Further upside advances in commodity markets supported the currencies of the countries exporting commodities, USDCAD -0.38%, AUDUSD +0.51%, USDNOK -0.27%.
The Sintra forum hosted by the ECB contained many interesting details on the ECB's short-term plans for tightening policy. Lagarde has almost openly announced plans to raise rates by 25 bp in July and possibly by 50 bp in September. The statements of the head of the ECB provided support to the European currency, EURUSD rose to 1.06, however, the upside breakout failed and subsequently the pair continued to consolidate near the round level.
ECB official Wunsch said today that he sees an opportunity to raise rates by 50 bp in September and that the cumulative rate hikes this year should be 200bp. Yields on German long-term bonds edged up and gained about 10bps, signaling market concerns that the ECB's announced actions may not be enough:
Oil quotes added more than 1% amid reports that the G7 countries are considering imposing price caps on Russian oil. Yesterday it also became known about the conversation between French President Macron and the prince of Saudi Arabia, in which he said that the level of oil production in the country was close to the maximum and that the possibility of increasing output is limited to 150K b/d.
Market focus today is on data on the US trade balance, the US house price index, as well as the report on consumer confidence from the Conference Board. As for the latest index, it is expected to decline from 106.4 to 100.4, a weaker print may cause a reassessment of the Fed's tightening pace towards lower pace and cause a negative reaction of the dollar.