Global macro overview for 23/06/2017

Global macro overview for 23/06/2017:

Three Federal Open Market Committee officials will be speaking today: James Bullard (15:15 GMT), Loretta Mester (16:40 GMT) and Jerome Powell (18:15 GMT). All of them represent either hawkish or dovish point of view regarding current FED monetary policy. The current market consensus seems to be that the Federal Reserve will continue tightening monetary policy, despite low inflation and lowering inflation expectations. Global investors fear that the Fed could tighten policy more than the data really warrants, and that it eventually hurt the US economy too much.

Current data from the US economy are showing the overall good health of all economic sectors with employment and housing as the top performers. The average wages growth is still limited and is not rising as fast as expected, but still, the pace of expansion is relatively good. On the other hand, a persistent lack of inflationary pressures is the biggest problem for FOMC members. In the near term, inflation in the US is expected to remain slightly below the 2% target, but in the medium term, the FED targets should be reached as household spending has picked up and fixed investment has continued to expand.

Last week, the Federal Reserve Bank raised the interest rate from 1.00% to 1.25% in an 8-1 vote. Moreover, the analysis of the dot-plot revealed that 8 out of the 16 FOMC members are seeing more interest rate hikes in the near future. This point of view should help the US Dollar to appreciate more across the board in the nearest future.

Let's now take a look at the US Dollar Index technical picture on the H4 time frame. After the interest rate decision, the bulls have managed to break out above the navy trend line resistance around the level of 97.50, but the price was capped at the next technical resistance at the level of 97.80. Currently, the price is testing the navy trend line from below in overbought market conditions.

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