The Fed’s unexpected “hawk’s claw” has triggered a chain reaction of major central banks.
Beijing time in the early hours of June 17, the U.S. Federal Reserve Board announced that by the end of 2023, the Fed will raise interest rates twice. Federal Reserve Chairman Jerome Powell said.
“When we feel the economy is making substantial further progress, we will scale back our bond purchases.”
However, Bank Indonesia expects that the Fed will not taper in 2021, but will begin to implement tapering in the first quarter of 2022.
After the Fed, the major central banks have also taken a stand today, in which hawkish words hawkish words are frequently seen. Thursday’s European session, spot gold lost $ 1790 / ounce, down 1.26% during the day, down more than $ 35 from the daily high. comex futures gold fell heavily, down 4.00% during the day, now at $ 1785.10 / ounce.
Spot gold lost another $1780/oz in the evening, down $50 from the daily high, and was hit by a large single smash:.
COMEX most active gold futures contract 20:20 within one minute trading orders instantly traded 3633 lots, trading contracts worth a total of $ 647 million
20:24 One-minute buying and selling orders instantly traded 2,173 lots, the total value of trading contracts 386 million U.S. dollars
At the beginning of the U.S. session, the daily decline in spot gold expanded to 2%, spot silver fell below $26/oz, refreshing a new low since May 3, down 3.48% during the day. COMEX silver futures plunged 5.00% during the day, now at $26.41/oz.
Domestic futures early in the night session, Shanghai silver futures main contract fell more than 4%, Shanghai gold fell more than 2%.
The dollar against the Swedish krona, the dollar against the Norwegian krona hit a new high since 2 months, the pound U.S., Europe and the United States short term decline.
The U.S. precious metals fell hard collectively, spot palladium plunged over 8% during the day, now at $2574.35/oz, palladium futures fell over 9% to $2579/oz; spot platinum fell over 3%, platinum futures fell over 5%. London Metal Exchange (LME) three-month copper futures fell more than 3%.
Indonesia’s central bank said in the morning.
“It will gradually exit the easing policy starting with tapering of bond purchases.”
On the evening of June 16 local time, Brazil’s central bank announced a 75 basis point interest rate hike, raising the benchmark rate to 4.25%, which is the third consecutive rate hike by the central bank this year. At the same time, the bank also left the door open for more substantial rate hikes in the future, and is expected to raise rates by another 75 basis points at its next monetary policy meeting in August, not even ruling out the possibility of further increases.
Brazil’s central bank has raised rates more than other emerging market central banks, including Turkey and Russia, so far this year.
For his part, Eiji Maeda, former executive director of the Bank of Japan, said.
“The Bank of Japan may begin discussions from around 2023 on how to phase out special stimulus programs, including abandoning negative interest rates.
The BOJ may raise short-term interest rates to around 0-0.5%, but this would be an exit from unconventional stimulus measures, not the start of a rate hike cycle.”
For his part, Bank of Canada Governor McCollum said.
“If the central bank’s forecasts are correct, the economy will need less quantitative easing. Adjustments to quantitative easing will depend on the strength of the economic recovery. Further adjustments to the quantitative easing program will be gradual and we will consider them carefully as we assess future data and communications.”
In the evening the Turkish central bank announced its interest rate resolution, leaving the key interest rate unchanged at 19%, in line with market expectations, and the Turkish central bank pledged to maintain tightening before the CPI slowdown. The dollar fell more than 300 points against the Turkish lira in the short term.
But the ECB’s dovish stance remained firm. When asked whether the ECB will discuss the issue of reducing the size of the bond purchase program at its September meeting, Philip Lane, the bank’s chief economist, said.
“It’s too early and unnecessary to talk about it. It would be a good time to really talk about it after we have more and more good news about vaccinations and the continued decline in cases.”