- Speakers at the Fed on Monday included Bostic, Barr, Waller and Jefferson
- Iranian official media confirmed that there were no survivors from the helicopter crash
- The Saudi Crown Prince postpones his visit to Japan
- ICYMI – China's benchmark lending rates remained steady: 1-year loan coverage ratio at 3.45% and 5-year at 3.95%
- The People's Bank of China sets the central exchange rate for the US dollar against the Chinese yuan at 7.1042 (versus the estimate of 7.2162)
- China sets interest rates on one- and five-year loans unchanged, as expected
- Bank of England Deputy Governor Ben Broadbent speaks on Monday
- Pimco says the next step for the Federal Reserve and Reserve Bank of Australia is more likely to be a cut, not a hike
- Weak consumption in Japan could increase pressure on the Bank of Japan to raise interest rates and slow the yen's decline
- Oil – Morgan Stanley expects demand to grow more than usual
- The Reserve Bank of New Zealand's Shadow Monetary Policy Board recommends holding interest rates this week
- UBS expects the Fed to cut interest rates later this year – here's why
- Strong evidence points to significant intervention in the Chinese currency market in April to support the Chinese Yuan (RMB).
- A helicopter carrying Iranian President Ebrahim Raisi and other leaders has disappeared
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The week opened with ears open for a speech on Sunday (US time) from Fed Chairman Powell. It was a law school speech, delivered remotely by video by Powell when he contracted Covid late last week. Powell did not comment on economics or politics.
Data flow was barely present.
However, we have the Loan Key Rate (LPR) settings from the People's Bank of China. LPRs play a vital role in setting interest rates on loans and mortgages in China. The People's Bank of China left both the 1- and 5-year bonds unchanged, as widely expected, at 3.45% and 3.95%, respectively. The last time one year was cut was in August last year while the 5 year cut was in February this year. Expectations indicate that the People's Bank of China is still likely to ease monetary policy further. One compelling reason is that Chinese banks will need more liquidity to buy government bonds, including the issuance of long-term special treasury bonds that began last Friday – these bonds raise cash for the purposes of building the economy (stimulus).
In terms of news, a helicopter carrying Iranian President Ebrahim Raisi and Iranian Foreign Minister Hossein Amir Abdollahian crashed in a mountainous area in the East Azerbaijan region in Iran, northwest of Tehran and on the border with Azerbaijan. It took several hours to find the downed helicopter, and when it was found it was just a smashed and burned wreckage. No one on board survived.
This is likely to have implications for oil prices. While there are no suggestions, at least so far, of foul play, if such matters were to emerge and perhaps the United States or Israel were to be blamed, it would amount to an escalation of an already tense situation in the Middle East. Which would, on the margin, be supportive of oil.
In other news, Saudi King Salman bin Abdulaziz is undergoing a treatment program at Al Salam Palace in Jeddah for a lung infection. Saudi Crown Prince Mohammed bin Salman was scheduled to visit Japan from May 20 to 23. He postponed the trip. He was scheduled to meet Prime Minister Fumio Kishida.
Oil prices rose today with the exit of these two elements from the Middle East.
Gold, silver and copper jumped. Gold to a record level.
The USD/JPY pair rose towards the 156.00 level and then pulled back from there. The major forex currencies were mainly restricted to only small ranges.
Brent oil, small opening gap to start the week: