The latest Fed minutes revealed that some members voted for an increase in the key interest rate, worrying markets. This caused stock indices to decline, and local markets to dip at the opening of trading today, especially since domestic problems, such as the anticipation of a continued and real increase in interest rates by the Bank of England and ECB, persist.
ADP's employment report lies ahead, and forecast say it will show a 228,000 increase in jobs for June, slightly lower than May's 278,000. Although this number indicates an obvious slowdown, it still points at a good situation in the labor market and in the economy.
A weaker-than-expected figure will support the US stock market and dollar. However, any surge, if it does occur, will be limited due to the uncertainty hanging over markets regarding future interest rate increases.
The Fed continues its hawkish rhetoric, but real actions diverges, indicating verbal intervention. This could simply mean that the bank wants to achieve its goals without raising the level of interest rates and plunging the national economy into recession.
In short, interest rates will not increase unless inflation resumes its rise. Most likely, the current market situation will continue in the foreseeable future.
Forecasts for today:
USD/JPY
The pair may rise if the ADP employment data exceeds expectations. If that happens, 144.15 will be broken, which will lead to a limited rise to 145.15.
USD/CHF
The pair consolidates below 0.9000. Better-than-expected employment report in the US will lead to a local increase to 0.9055.
