BoJ maintained its policy on 16 June

The dollar strengthened yesterday after data showing an increase in retail sales in May, after two consecutive months of decline, showed a stretch of recovery in the world's largest economy. Data overnight showed US retail sales grew 17.7% in May, far above the 7.9% growth forecast. Meanwhile core retail sales also grew 12.4%, also above the 5.5% growth forecast. The data complements the solid US data after non-farm payroll data grew 2.5 million in May. The dollar also strengthened after the US government was preparing an infrastructure proposal of nearly $ 1 trillion. The report comes a day after the Fed's stimulus will start buying corporate bonds to inject liquidity. The dollar strengthened 0.55% on the euro and 0.01% on the yen.

The Bank of Japan (BoJ) maintained its policy at its meeting yesterday. Even so, the BoJ increased the amount of liquidity to the economy or what is often called “printing money” by US $ 300 billion to US $ 1 trillion, from US $ 700 billion, through a soft loan program to companies affected by the Covid-19 pandemic. The BoJ also does not hesitate to add stimulus if needed.

Gold prices rose yesterday due to concerns about a new case of the corona virus in China, ignoring the strengthening of Wall Street following US retail sales data that grew out of predictions and optimism about the Covid-19 drug. The Beijing government raised the emergency level to level II from the previous level III. There have been 100 new cases discovered lately. Previously, gold was under pressure due to the strengthening of Wall Street after US retail sales data grew 17.7% in May.

Oil prices rose more than 3% yesterday following a report by the International Energy Agency (IEA) which estimates an increase in demand for oil and products next year. The IEA estimates that while oil demand will fall 8.1 million bpd in 2020, oil demand in 2021 will rebound by 5.7 million bpd, a record annual oil demand. Meanwhile, OPEC's monthly report will be released on Wednesday, after oil producers, known as OPEC +, agree to extend output cuts to nearly 10 million bpd until July and will review compliance with the cuts every month. Oil prices also received support after US oil producers cut production. Energy Information Administration (EIA) last Monday estimated an oil decline of 93 thousand bpd from oil producers in the US. The price of WTI oil rose 3.4% to $ 38.38 and Brent rose 3.1% to $ 40.96.

Asian stocks varied as investors faced two sentiments, the recent equity rally thanks to signs of US economic recovery, offset by concerns about the spread of the two corona viruses. The Nikkei was down around 0.51, while the US stock index futures were seen rising, with the Dow Jones up 0.13% and the S&P 500 also slightly up 0.13%.

Today's Focus: Powell

Powell will again submit his testimony to the other two before the congress. The second testimony is likely to be the same as the first testimony that the Fed will continue to support the economy with all policy tools. In addition to Powell, there are some data that are worth noting, including; Inflation data from the UK, Eurozone and Canada. Then there are US housing data.

[About The Author]

Fanny has started her self-learning of Forex since 2005 and has joined an Indonesian broker as a financial consultant in 2009. Through “trial and error”, she has learnt a lot from failure experiences. She is now a renowned trainers for the forex beginners and has helped the clients to get the profits from trade.

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