Market Highlight 14.06.2024

The USD Index increased by more than 0,5% last night that almost entirely recovering from the previous day's decline despite of weaker data from U.S. factory production costs in May. This week, the USD reached its highest level in a month (105,46) on Tuesday, before dropping 1% following the U.S. CPI data. U.S. production costs unexpectedly fell in May, with the overall PPI decreasing by 0,2% last month after rising by 0,5% in April. In case of two key components, consumption and production, signaling cooling inflation, the forecast is that the Personal Consumption Expenditures (PCE) price index - the FED's favored inflation measure - will only increase by 0,1% in May. If this result is confirmed in the data released on June 28th, it will support the possibility of the FED implementing two rate cuts by the end of this year (September and December).

The USD rebounded strongly after the conclusion of the FED's June policy meeting, projecting only one rate cut this year and postponing the start of rate reductions to December at the latest. FED Chairman Jerome Powell stated that policymakers are ready to maintain rates until the economy shows clear signs of a significant reduction in price pressures or a sharp increase in U.S. unemployment.

The USD/VND interbank exchange rate was traded within a narrow range around 25.440 yesterday which slightly decreasing by the end of the day. The FED leaving open the possibility of one or two rate cuts by the end of the year has reduced market pressure compared to the period of sharp exchange rate increases about a month ago. The market is showing better self-regulation despite the demand for foreign currency still outweighing the supply side.

Asia Commercial Joint Stock Bank assumes no responsibility or liability for any purpose of reference or using the information provided by this newsletter.

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