Market Highlight 01.07.2024

The core Personal Consumption Expenditures (PCE) price index in the U.S. increased by 2,6% in May compared to the same period last year that slowing down from the 2,8% increase in April. Consumer prices hardly rose compared to the previous month which continuing the trend of cooling inflation reflected in the CPI and PPI reports earlier this month. The market has increased its expectations to nearly a 70% chance that the FED will start cutting interest rates in September and once more at the end of this year. However, weaker economic data in the U.S. have yet to change the FED members' perspectives. Many FED policymakers still anticipate only one rate cut this year, with some even open to the possibility of raising rates. Unless inflation in the U.S. continues to cool rapidly or the labor market deteriorates in the coming months, it is unlikely that the FED will urgently return to rate cuts.

The USD Index adjusted down for the second consecutive day last weekend but still recorded a nearly 1,2% increase since the beginning of June. The market continues to look for signals on when the FED might cut rates, with many important economic data and events happening this week. First, the U.S. non-farm payroll report for June on Friday and the FED Chairman's speech on "Monetary Policy in Transition" at the ECB's annual forum on Tuesday will be the market's focal points. Additionally, developments in parliamentary elections in France and the U.K, along with inflation data from the Eurozone, will significantly impact the EUR trend in July.

The USD/VND interbank exchange rate slightly decreased for the second consecutive day last Friday to below 25.450. This is expected to remain the main market price range this week, although trading sentiment improved after Vietnam's Q2 GDP data came in higher than forecast (up 6,93% compared to the same period last year).

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Directly contact us to receive market news and consultancy on foreign exchange products and derivatives:

- Financial Markets Division – Email: ktttc@acb.com.vn ; or

- Mr. Khanh Hoang (Financial Markets Senior Analyst) – Email: hoangnk@acb.com.vn