Nickel prices fell on Wednesday even as the dollar sustained heavy losses against most major rivals, but trading on the industrial metal took a hit from a decision by the London Metals Exchange.

The Exchange decided to stop nickel deliveries from a Finnish factory owned by the Russian company. MMC Norilsk Nickel PJSC.

The Exchange said in separate memos that it’ll ban the shipments of the nickel products from the Finnish factory starting October 3. 

It didn’t expand on the reasoning behind the measure, however it’s likely related to the overall sentiment against Russian businesses. 

The Finnish factory produced 65 thousand tonnes a year of refined nickel, making it a major player in the field. 

Otherwise, the dollar index fell 0.5% as of 16:48 GMT to 105.2, with a session-high at 105.8, and a low at 105.05. 

On trading, nickel spot prices fell 4% as of 16:58 GMT to $17.409 thousand a tonne. 

The dollar fell in European trade on Wednesday against a basket of major rivals, extending losses for the fifth straight session after somewhat bearish remarks by Fed Chair Jerome Powell.

The remarks boosted the odds of two Fed rate cuts this year, with investors now waiting for important US data this week to gauge the path forward for monetary policies.

The Index

The dollar index fell 0.1% today to 105.59, with a session-high at 105.80. 

The index closed down 0.15% on Tuesday, the fourth loss in a row away from eight-week highs at 106.13. 

Powell

Federal Reserve Chair Jerome Powell said in his speech today at the Central Banks Forum in Portugal that he wants to exert more efforts to control inflation before taking the decision to cut interest rates.

Powell warned from cutting rates prematurely, adding that central banks should be more confident first that inflation is sustainably moving towards 2%. 

However, he did note that the Fed achieved a lot of progress containing inflation with the outlook bright. 

US Rates

According to the Fedwatch tool, the odds of a Fed rate cut in September rose to 67%, and to 79% in November. 

US Data

Later today, the ADP private sector employment data will be released, expected to show the increase of 163 thousand new jobs last month. 

The ISM services PMI is expected at 52.6 for June, down from 53.8 in May.

Fed’s Minutes 

Later today, the Federal Reserve will release the minutes of the June 11-12 meeting, at which it voted to hold interest rates unchanged. 

Fed Chair Powell said back then the Fed will maintain interest rates at current levels for as long as it’s necessary to control inflation.

The Fed also estimated a single interest rate cut this year, down from three rate cuts in previous forecasts. 

Euro rose in European trade on Wednesday against the dollar for the fifth straight session, about to touch three-week highs following bullish remarks by ECB President Christine Lagarde.

The remarks hurt the odds of an ECB interest rate cut later this month, as policymakers continue to analyze the inflation’s trajectory. 

As European data grows scarce this week, the markets will focus on the US labor data, ahead of the French parliamentary elections next Sunday.

The Price 

The EUR/USD rose 0.2% to $1.0762, with a session-low at $1.0736.

The pair closed 0.1% higher, the fourth profit in a row, marking three-week highs at $1.0776. 

Lagarde 

ECB President Christine Lagarde said in the Central Banks Forum in Portugal that the ECB needs more time to verify inflation is heading towards 2%, adding that recent developments showed a rate cut isn’t necessary. 

The ECB cut rates for the first time in June for the first time since 2016 following an extended wave of rate hikes, but held off any further moves due to uncertainty. 

Lagarde added that it’ll take some time before the ECB can make sure inflation is stable.

European Inflation  

Eurozone inflation slowed down last month but services prices remained stubbornly high, triggering concerns.

European Rates 

Lagarde’s remarks reduced the odds of an ECB interest rate cut at the July meeting. 

Euro rose in Asian trade on Wednesday against the yen, extending gains for the sixth straight session and hitting 32-year highs. 

The Europe-Japan interest rate gap continues to underpin the euro against the yen, and that will likely remain so for the rest of the year. 

The Japanese government recently announced a negative revision of Japan’s GDP numbers in the first quarter, heaping more pressure on policymakers and hurting the prospects of more rate hikes this year.

The Price 

The EUR/JPY pair rose 0.15% today to 173.69, the highest since 1992.

The euro rose 0.1% against the yen yesterday, the fifth profit in a row after piercing the psychological level of 172 yen per euro. 

Selloff 

The yen has faced a heavy selloff against major rivals amid doubts that the Japanese government might not intervene after all to support the yen. 

Rate Gap

The interest rate gap between Europe and Japan is currently holding at 415 basis points in favor of the eurozone, in turn underpinning the euro’s against the yen. 

The European Central Bank is not likely to cut interest rates anymore this year, while the Bank of Japan is not likely to raise rates this year after recent developments. 

BOJ 

At the June 14 meeting, the Bank of Japan maintained the current program of government bond purchases at 38 trillion yen a month.

The bank said it’ll draw up plans to reduce purchases in the next year or two at the July meeting. 

Such steps were considered as signals towards normalizing the monetary policy, eventually leading to more rate hikes. 

However, after the government reported a deeper contraction than expected in the first quarter, many analysts now expect the BOJ to hold off such plans.