Chief Powell could bring back markets’ roller coaster

What you need to take care of on Wednesday, June 22:

US Federal Reserve chief Jerome Powell will testify before Congress. His pre-prepared remarks will be out ahead of the event. Market players will be looking for hints on future quantitative tightening. Additionally, the UK will post updates on inflation data.

The American dollar edged modestly lower against most major rivals on Tuesday amid a better market mood. The USD/JPY pair, however, soared to a fresh multi-year high of  136.61, holding nearby at the end of the US session. The yen’s collapse is mostly due to the Bank of Japan’s stubborn commitment to its ultra-loose monetary policy.

Global indexes edged higher, with Wall Street posting substantial gains and limiting demand for safety. US government bond yields ticked higher, but not enough to revive inflation-related concerns.

Meanwhile, central bankers keep hinting at aggressive measures. Bank of England Chief Economist Huw Pill said they would certainly be ready to act if they see evidence of persistent price pressures. Reserve Bank of Australia Governor Philip Lowe opened the door for a 50 bps rate hike in July. Finally, European Central Bank Governing Council member Olli Rehn said it is very likely that the September rate hike would be bigger than the 25 bps planned for July.  

 The EUR/USD pair trades around 1.0530, little changed on a daily basis. GBP/USD posted a modest advance and now trades around 1.2280. The better tone of equities helped commodity-linked currencies to advance against their American rival. AUD/USD is up to 0.6970, while USD/CAD trades in the 1.2910 price zone.

Gold is battling with the $1,830 level under pressure. Crude oil prices saw little change on Tuesday, with WTI now trading at around $109.50 a barrel. 

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