Fed officials still on track for a rate hike

•      Fed officials still on track for a rate hike

•      Fed Chair Yellen repeated that the path of rate increases to follow are more important than the timing of the liftoff. The timing will depend on the data and the increases are likely to be gradual.

•      FOMC members lowered their interest rate forecasts. However, the median “dot” for 2015 stayed at 0.625% consistent with two rate hikes.

•      As for the economic projections, economic growth and unemployment rate were both lowered, while consumer prices remained unchanged from the previous forecasts.

•      USD weakened on the lower interest rates forecast, lower economic projections and no clear sign of the timing of the first rate hike.

•      We believe that September is still the most likely lift-off date, but the likelihood may have declined a bit.

•      Overnight, Kiwi plunged after New Zealand’s GDP for Q1 slowed by more than expected

•      Eurogroup meeting on Greece

•      No new proposals are expected at this meeting. Thus it could be a short one.

•      In the event of a deadlock, an emergency EU leaders’ summit will be called over the weekend.

•      Today:

•      Switzerland: SNB meeting. The forecast is for the Bank to remain on hold.

•      Norway: Norges Bank meeting. The expectation is for 25bps rate cut. This could be NOK-negative.

•      UK: Rentail sales for May are expected to fall a bit, a turnaround from the previous month. GBP could weaken a bit.

•      US: CPI for May. Coming a day after the FOMC meeting and the new projections, a strong surprise is needed for investors to change their view on the inflation outlook.