FED Chairman Powell spoke about monetary policy at the ECB Forum today at 09:30 CEST. He indicated that the FED plans to raise interest rates twice more this year, highlighting the robustness of inflation and the job market. The FED places importance on the strength of the labor market, as it contributes to inflation and serves as a key factor for continued monetary tightening.

* The US economy grew by 2% in the first quarter of 2023. The data came in above expectations of 1.4%, confirming the strength of the US economy.

Following strong data, the US Dollar index strengthened while Gold prices declined below 1900. The US 10-year bond yield rose sharply to 3.82%, with the 2-year bond yield reaching 4.86%. Despite weakness in other global economies, the US economy’s strength is bolstering the dollar and encouraging the Fed to consider further rate hikes. Atlanta Fed Chairman Bostic, in contrast to Powell, expressed a more cautious stance. He stated in a speech today that he doesn’t see as much urgency as previously thought to continue raising rates. However, Bostic’s remarks such as “let’s not rush to increase interest rates” may seem somewhat careless given the inflation trend. Bostic added a precautionary note to these statements, saying “in my view, it’s not a signal.”

Germany’s inflation for June was announced at 0.3% on a monthly basis and 6.4% on an annual basis, slightly exceeding expectations. The removal of certain subsidies implemented by the German government last year to address high inflation appears to have influenced these preliminary inflation figures.

*Japan’s Finance Minister stated that they closely monitor foreign exchange movements and that one-way transactions are not desired.