US President Joe Biden signed a new holiday yesterday - Juneteenth, which is a holiday celebrating the liberation of slaves in 1865, following the victory of the opponents of slavery in the Civil War. The holiday is set for June 19, but due to the weekend, the day off has been postponed to June 18. Therefore, most offices in US are closed today, although exchanges may remain open.
Also yesterday, US indices moved in different directions: Dow Jones slipped by 0.6%, while Nasdaq gained 0.9 %. S&P 500, meanwhile, remained the same.
Evidently, the market recovered from the shock it underwent when the Federal Reserve announced an earlier-than-scheduled rate hike. The central bank also discussed a possible decrease in bond purchases, which pushed dollar up by up to 2%.
As for the Asian markets, they went down this morning. Japan indices fell 0.1%, while China indices dropped by 0.5%
Apparently, inflation in Japan rose 0.1% in May, so the Bank of Japan left the rate unchanged at -0.1%.
Going back to the US, the current administration disclosed that they are going to invest more than $ 3 billion in the development and production of antiviral pills to treat coronavirus. They said it could greatly help the fight against COVID-19, not to mention save lives.
As of Thursday, the number of new COVID-19 infections in the world is around 350,000. About 70,000 came from India, while 60,000 came from Brazil. Both UK and US have 11,000 each.
With regards to the oil market, a deep correction began yesterday. Prices declined by as much as 3%, all due to the announcement of the Federal Reserve. Now, prices are down 0.7%, so Brent is trading at $ 72.60, while WTI costs $ 70.50. Further decline may occur later, to up to $ 60 - $65.
Considering all this, S&P 500 is now at 4.224 points, and is expected to range from 4.180 - 4.260 points.
Wall Street Journal said the reason is the ongoing rise in global inflation, which occurred because of the Fed's aggressive policy of supporting growth. To be more specific, it provoked a sharp increase in demand for commodities, leading to inflation.
But the Fed is certain that the jump in commodity prices will be short-lived. For example, lumber futures has now dropped by 40%, after skyrocketing in April-May.
In terms of dollar, the USD index hit 91.90 points, thanks to the decision of the Fed. Most likely, it will jump further to 91.50 - 92.20 points. As such, EUR/USD dropped from 1.2000 to 1.1900, and may even fall to 1.1700 in the coming weeks.
As for USD/CAD, it now costs 1.2370, and is forecast to trade around 1.2300 - 1.2470. The rise of dollar against loonie is likely to continue, but there will be a strong resistance zone at 1.2500 - 1.2600.
Conclusion: The tone of the week's closing is important for the US market, more specifically on whether investors are ready for a new wave of growth, after the Fed's new position in monetary policy.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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