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The US CPI rose by 0.2% in June 2023, following a 0.1% increase in May over the past 12 months, the overall index increased by 3.0%, which was mainly driven by increases in the shelter and motor vehicle insurance categories.
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CPI core inflation drops to 4.8%, also stronger than expected, which triggers market euphoria and fuels speculation that the Fed may only raise rates one more time.
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Lower inflation than expected triggers significant market movements, with EURUSD exceeding 1.11 and marking its highest levels since April 2022.
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Barkin says US inflation is still too high despite a slowdown in June and warns that if the Fed backs off too soon, inflation could return stronger
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On the other hand, Kashkari says that only "persistent" inflation could trigger further action from the Fed
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US100 recorded its highest levels since January 2022, gaining 1.6% at one point. Later, the gains were partially reduced.
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Bank of Canada (BoC) has raised its target for the overnight rate to 4.75%, in line with its ongoing policy of quantitative tightening. The bank's decision is in line with forecasts, which anticipated a 25 basis points rate hike.
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According to BoC: Canada's economy has shown unexpected strength, with robust consumption growth and signs of excess demand, particularly in the housing market.
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Gold gained 1.3% and silver over 4% in response to a sharp drop in 10-year yield to 3.85%.
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USDJPY falls below the 140 level, which is also linked to the recent significant wage increase - for May the dynamics was 2.5%, which was the second highest reading in 5 years.
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As expected, RBNZ kept interest rates unchanged - NZD was slightly weakening.
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On the other hand, the BoC raised rates by 25 bp, as expected, but raised inflation projections, and the target is to be achieved only in mid-2025 (previously at the end of 2024).
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Oil prices rose significantly today and accelerated after the publication of inflation. Brent oil exceeded $80, and WTI approached $76, even despite a significant increase in oil reserves to about 5 million barrels (this did not significantly increase comparative reserves).
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Cryptocurrencies are recording slight increases today, with ETH showing higher gains than BTC.
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