Let’s get straight into details and what can we expect from the respective policy meetings this week.

RBA – Not one for change

With Australian inflation still holding well above the RBA’s threshold range, don’t expect much fireworks from the decision this week. The central bank is expected to keep the bank rate unchanged. And the language in the statement is very much to remain as per the May meeting here.

Although markets are still seeing lingering risks of a rate hike with the RBA, they aren’t likely to lean towards that direction unless inflation stays much more stubborn in the months ahead. As such, the RBA is likely to keep their options open and stick with the forward guidance of „not ruling anything in or out“.

In terms of market pricing, traders are not pricing in any major changes all the way through until November for now. So, the aussie might not have much to work with barring any surprises from the RBA.

SNB – Once again, the propensity to surprise

The SNB surprised with a rate cut in Q1 here and they could surprise again with their policy decision this week. Although traders are largely anticipating another rate cut to follow, it might not be the case. Personally, I think the decision is closer to a coin flip rather than favouring a rate cut.

As an aside, the market pricing is implying a ~72% probability of the SNB cutting rates on Thursday.

The latest inflation report here is still an argument for the SNB to cut further but there is a caveat. Services inflation rose to 2.2% and Jordan was explicit in warning that a weaker franc is the most likely source of inflation now. Adding to that, the latest sight deposits data also suggest that the SNB might be intervening to prop up the franc in recent weeks.

So, if the SNB isn’t too comfortable with inflation risks, they could very easily just choose to not cut rates this week.

As such, I’d view the balance of risks to be for a higher Swiss franc. And that includes even if they do cut rates on Thursday. Considering the political climate in Europe, safety flows are likely to help underpin the franc in the short-term. So, the call would be to fade any overstretched EUR/CHF upside on the SNB this week.

BOE – A nothing burger or laying the ground work for after the summer?

This time last month, some had the June meeting pinned for when the BOE would start cutting rates. But hopes for that were dashed after the April CPI report here. In that lieu, we will be getting the May CPI report on Wednesday but it won’t change anything on what we should expect from the BOE this week.

The central bank is not going to cut rates and will be expected to maintain their current policy stance mostly.

The thing to watch out for will be whether or not they will begin teeing up a move for August. Policymakers had previously said that they were comfortable with markets pricing in such a move but traders are erring to the side of caution for now. A softer set of inflation numbers might bring August back on the table. But for now, traders are still having some reservations.

The market pricing implies a ~45% probability for a move in August, with September being more assuring at ~89%.

The bank rate vote is also one to be mindful of. However, it is expected that it will remain the same at 7-2. The two dissenters, being Ramsden and Dhingra, are still anticipated to vote for an immediate 25 bps rate cut.

If the BOE maintains its language and reiterates that policy needs to remain „restrictive for an extended period of time“, that will keep traders skeptical for a move in August. That especially if accompanied by stronger price pressures in the inflation data this week.

It would not be prudent for them to explicitly tee up a rate cut for August, but they could offer some subtle hints on that. We’ll see. But of course, that needs approval first from the May inflation data. Otherwise, one can safely rule out such a move for the BOE.

The way I see it, the UK CPI report this week might just steal the spotlight and we’re left with a nothing burger on Thursday. That unless the figures are softer than estimated.

Headline annual inflation is expected to fall back to the BOE’s target of 2% in May. That said, core annual inflation remains closer to 4% as per the April reading. Meanwhile, services inflation is still extremely stubborn and has been a thorn for the BOE in delivering further progress on policy. So, that remains a key spot to watch.

This article was written by Justin Low at www.forexlive.com.

Fundamental
Overview

The USD last week lost
ground across the board following the soft US CPI report as the market priced back in two rate
cuts by the end of the year. The moves were reversed soon after though as we
got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for
this year despite the soft US CPI report.

Fed Chair Powell backpedalled on the projections nonetheless making
them a bit less worrying as the central bank remains very data dependent. The
rally in the US Dollar eventually picked up steam as the risk sentiment turned
more cautious.

The NZD, on the other hand,
got pressured mainly because of the risk-off sentiment and the US Dollar
strength. Moreover, today the Services
PMI came in very weak which weighed on the Kiwi in the Asian session.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD spiked into the key 0.6217 resistance following the soft US CPI report
and then sold off following the more hawkish than expected FOMC decision. We
have a strong support around the 0.6082 level where we have also the 38.2% Fibonacci retracement level for confluence.

This is where we can expect
the buyers to step in with a defined risk below the support to position for a
rally into new highs with a better risk to reward setup. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into the 0.60 handle next.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price action has been mostly rangebound between the 0.6082 support
and the 0.6217 resistance. These will be the key levels that the market will likely
need to break to start a more sustained trend. For now, will could keep
bouncing around as the market awaits new catalysts.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that from a risk management perspective, the sellers have a good resistance
zone around the 0.6142 level where they will also find the confluence of the trendline
and the 38.2% Fibonacci retracement level.

The buyers, on the other
hand, will want to see the price breaking higher to gain some conviction and
start targeting the break above the 0.6217 resistance. The red lines define the
average
daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Retail Sales and US Industrial Production. On Thursday,
we get the New Zealand GDP and later in the day the US Housing Starts, Building
Permits and the US Jobless Claims figures. On Friday, we conclude the week with
the US PMIs.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• A really big move would matter for CPI forecast
• But these are not big movements
• Do not think policy divergence with the Fed is any more of an issue than it was before
• The peak effect of rates on inflation hasn’t occurred yet

He’s offering plenty of remarks today, covering a broad range of topics. But the bottom line is that they are still going to be data-dependent, waiting to see if they can cut rates again in September next.

This article was written by Justin Low at www.forexlive.com.

UPCOMING EVENTS:

• Monday: PBoC
  MLF, New Zealand Services PMI, China Industrial Production and Retail
  Sales, Eurozone Wage Growth.
• Tuesday: RBA
  Policy Decision, Eurozone ZEW, US Retail Sales, US Industrial Production.
• Wednesday: UK
  CPI, US NAHB Housing Market Index, BoC Meeting Minutes.
• Thursday: New
  Zealand GDP, PBoC LPR, SNB Policy Decision, BoE Policy Decision, US
  Housing Starts and Building Permits, US Jobless Claims.
• Friday:
  Australia/Japan/Eurozone/UK/US Flash PMIs, Japan CPI, UK Retail Sales,
  Canada Retail Sales.

Monday

The PBoC is expected to keep the MLF rate
unchanged at 2.50%. There doesn’t seem to be any urgency to ease policy further
amid an improvement in the economic data. The central bank will also likely
keep the LPR rates unchanged at 3.45% for the 1-year and 3.95% for the 5-year
on Thursday.

Tuesday

The RBA is expected to keep the Cash Rate
unchanged at 4.35%. As a reminder, the central bank got a bit more hawkish amid
a lack of clear improvement in inflation and said that it couldn’t rule in or
out future changes to the cash rate.

The RBA’s forecasts were revised to show
that rates will likely stay at 4.35% until mid-2025. The recent data supports
the case to keep the policy unchanged as the monthly
inflation report surprised to the upside and the labour
market data came in stronger than expected.

The US Retail Sales M/M is expected at 0.3%
vs. 0.0% prior, while the ex-Autos measure is seen at 0.2% vs. 0.2% prior.
Consumer spending has remained stable which is something you would expect given
the solid wage growth and resilient labour market. We are getting some worrying
signals from the UMich
Consumer Sentiment which could suggest that consumer spending is likely to
soften a bit.

Wednesday

The UK CPI Y/Y is expected at 2.0% vs.
2.3% prior, while Core CPI Y/Y is seen at 3.5% vs. 3.9% prior. The last
report was a bit of a disappointment for the BoE as services inflation,
which is what the central bank cares most about, came in much higher than expected
at 5.9% Y/Y vs. BoE’s estimate of 5.5%.

This report won’t change anything for the upcoming
BoE decision on Thursday, but a surprisingly soft release should see the market increase
the rate cuts pricing and tilt the central bank’s decision on a more dovish
side.

Thursday

The SNB is expected to cut interest rates to
1.25% although the market pricing stands around 60%, so it’s more of a coin-flip
between 1.50% and 1.25%. The latest inflation
rate came in line with SNB’s estimate at 1.4% Y/Y (Core 1.2% Y/Y).

The Swiss Franc saw a strong appreciation
recently due to Chairman Jordan’s comments
where he said that if any inflation risk were to materialise, it would most
likely be associated with a weaker Franc which could be counteracted by selling
foreign exchange (buying CHF).

He also touched on the neutral interest
rate (r*) and said that they estimate it to be around 0%. So, even if they cut
rates, in theory their policy would still be restrictive and if inflation were
to rise somewhat in the coming months, they could just intervene by buying
Swiss Franc.

The BoE is expected to keep the Bank Rate
unchanged at 5.25%. As a reminder, the last meeting was a bit more dovish than
expected with Ramsden joining Dhingra voting for a rate cut and Governor Bailey
delivering some dovish comments like saying that they could cut more than
the market expected.

It’s pretty evident that the central bank
is eager to cut but nonetheless wants a bit more confidence before easing the
policy rate. The tone will likely be shaped by the UK CPI the day before.

The US Jobless Claims
continue to be one of the most important releases to follow every week as it’s
a timelier indicator on the state of the labour market. Initial Claims keep on
hovering around cycle lows, while Continuing Claims remain firm around the
1800K level.

This has
led to a weaker and weaker market reaction as participants become used to these
numbers. Nonetheless, we got a notable
miss in both Initial and Continuing Claims last week although the culprit
might have been just a seasonal effect or measurement
adjustment.

This week Initial Claims
are expected at 240K vs. 242K prior, while there’s no consensus at the time of
writing for Continuing Claims although the prior release showed an increase to
1820K vs. 1790K previously.

Friday

The Japanese Core CPI Y/Y is expected at 2.6%
vs. 2.2% prior. The Tokyo CPI saw all inflation measures increasing compared to
the prior month, so we might see the same happening for the National readings.
It shouldn’t change much for the BoJ at the moment as they will likely need a
couple more reports before deciding on another rate hike.

As a reminder, the central bank
disappointed the market last week as it kept everything
unchanged despite expectations of a reduction in bond purchases. Nonetheless,
Governor Ueda in the press conference pre-committed
to a reduction immediately after the next meeting and mentioned that it will be
“substantial”.

Friday will also be the Flash PMIs Day
with the markets, as it usually the case, focusing more on the US readings:

• Eurozone Manufacturing PMI: 48.0 expected vs.
  47.3 prior.
• Eurozone Services PMI: 53.5 expected vs. 53.2
  prior.
• UK Manufacturing PMI: 51.0 expected vs. 51.2
  prior.
• UK Services PMI: 53.2 expected vs. 52.9
  prior.
• US Manufacturing PMI: 51.0 expected vs. 51.3
  prior.
• US Services PMI: 53.5 expected vs. 54.8
  prior.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

„Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.“

That’s the first amendment and may prove to be what undoes liberal democracies. Worse yet, the Supreme Court has interpreted ‚free speech‘ extremely broadly, including the use of money as free speech.

It’s increasingly clear to me this is an extreme vulnerability that being exploited in the US and around the world.

On June 6 the State Department’s top official on digital and cyber
policy, Nate Fick, told an audience at an event hosted by the Washington Post:

“I don’t think most American
citizens really viscerally understand how much of the content they see
on social platforms is actually a foreign intelligence operation…. I
just don’t think we viscerally get how much of what we see is
bot-generated or foreign intelligence service–generated.”

I have little doubt that’s true and an increasing fear that much of what I see — and maybe even things I believe — has been hijacked by these groups.

Seeing the tools that are out there with AI and bots, I believe it’s almost trivial now to set up a bot farm. If I were an anti-American Russian doing it, I wouldn’t be writing „Mother Russia is great,“ the aim would be to sow division, to crank up the volume on any issue, to inspire American hate for other Americans.

Divide and conquer.

I also believe that Russia sees itself as a victim of this game, rightly or wrongly. They believe that the Euromaidan rallies in Ukraine — which were organized on social media — were a US influence operation.

On Friday, Reuters reported an incredible story. During the peak of the pandemic, the US was running an online operation to discredit the Chinese vaccine in the Philippines and ultimately vaccines in general, putting thousands of lives at risk and the Philippines had among the worst inoculations rates in Southeast Asia.

It was part of a petty fight after China started a “disinformation campaign to falsely blame the United States for the spread of COVID-19,“ according to the report.

If the US was willing to do that to the Philippines, what is it doing elsewhere?

Reuters reports:

Today, the military employs a sprawling ecosystem of social media
influencers, front groups and covertly placed digital advertisements to
influence overseas audiences, according to current and former military
officials…. in February, the contractor that worked on the anti-vax campaign –
General Dynamics IT – won a $493 million contract. Its mission: to
continue providing clandestine influence services for the military.

This has been going on for a long time. In 2013, Reddit revealed that Eglin Air Force Base in Tampa Bay (the home of the US’s propaganda wing) was it’s most-addicted city.

After Euromaiden, the Russians became determined to retaliate and that was why the Internet Research Agency — founded by Yevgeny Prigozhin — was at work in the 2016 US election. I suspect the Russians were amazed at how well it worked and so did the rest of the world. The aim isn’t to invent stories but to elevate conspiracies and make people angry.

Given the comments from the State Department, the US knows its a target. Heather Cox Richardson wrote about it earlier this week:

Officials from the Office of the Director of National Intelligence
(ODNI) told lawmakers that Russian influence operations aimed at
undermining support for Ukraine and faith in democratic institutions
provide the top threat to the upcoming U.S. election. China is the
second-greatest threat but is more cautious because it is concerned
about U.S. blowback, while the third, Iran, acts primarily as a “chaos
agent,” trying to confuse voters. The ODNI officials said they have been
issuing warnings to political candidates, government officials, and
others targeted by foreign groups.

That brings us back to free speech. These kinds of campaigns are going to prove nearly-impossible to stop. Democrats like it when false rumours are spread about Republicans and vice versa. Anyone trying to stop the rumours would be seen as partisan or disloyal. It’s a win-at-all costs mentality that puts party ahead of country.

AI is going to hyper-charge this. There will be individually-optimized campaigns based on your data that create videos and ads targeted at you personally to make you unhappy and enraged.

Yes, some bot farms will be shut down but 10 more will spring up. I don’t see any way to stop it. The first amendment is written in stone and social platforms are open, anonymous and for sale.

What can we do? Ban anonymity online? That would be extremely unpopular. Go to a censored, walled-off internet like China? That’s completely incompatible with the Constitution and freedom in general.

For markets, the destabilization will inevitably lead to conflict and division; none of which can be good for growth.

This article was written by Adam Button at www.forexlive.com.

Apple broke higher this week on the back of the new AII news for the company (and its products announced ar the World Wide Developers Confeence.

Fundamentally, the hope is the new AI initiatives will stir a new round of product upgrades for its user base. That is something new vs what has been ho-hum improvements in the camera or other services.

Technically, the price broke out of an up-and-down trading range that has confined the stock between $165 and $200 since April 2023. Non-trending transitions to trending and if so, the trend has restarted with the breakout this week. That is very IMPORTANT..

What next?

Trends tend to be „fast, directional, and tend to go farther than what traders think“ (or expect). If so, the move this week is only the beginning.

If the goal is to stay on the trend, it is important to know when price action is not trending anymore. Technical tools will help to tell that story.

In this video, I discuss the breakout and more importantly outline where the trend is in jeopardy. As long as the describe technical levels are not breached, the buyers and trend remain intact. We all want to ride the trend.

Morevoer, if you want to be aggressive on a correction to „get in“ on the trend or add to your position, I will outline the low-risk levels on a correction, that would be a good level/area to buy the stock „on sale“.

In

This article was written by Greg Michalowski at www.forexlive.com.

• June US UMich June prelim consumer sentiment 65.6 vs 72.0 expected
• Macron’s gamble is looking like a disaster as new poll released
• France’s Macron: Economic programs by two extremists blocks are not realistic
• Chicago Fed Pres. Goolsbee CPI data this week was very good
• Baker Hughes US oil rig count -4
• ECB’s Lagarde: Unless we have a major shock, target is inflation to hit 2% in H2 2025
• Fed’s Mester: We are starting to see inflation move down again after stalling
• US import prices -0.4% vs +0.1% expected
• Canada April wholesale sales +2.4% vs +2.8% expected

Markets:

• Gold up $30 to $2331
• WTI crude down 13-cents to $78.47
• US 10-year yields down 2.3 bps to 4.21%
• CHF leads, GBP lags
• S&P 500 flat

The US dollar continued its climb early in the North American session with the euro and pound under particular pressure but those moves later reversed to finish final hours of the week flat. The Australian and Canadian dollar followed a similar path, recovering a portion of the losses that peaked at 10 am ET.

Some of the dollar selling came after a softer UMich sentiment survey, highlighting the vulnerabilities in the US economy, especially with the Fed in no rush to cut.

Have a great weekend.

This article was written by Adam Button at www.forexlive.com.

The NASDAQ index closed at a new record on Monday at 17192.53. It did the same on Tuesday, Wednesday, Thursday and again today to extend the streak of consecutive high close levels to five trading days.

The S&P was on a similar move this week, but close marginally lower today snapping it 4-day record close string.

Overall, however, both the S&P and NASDAQ indices are closing higher for the week. The Dow industrial average did not fare as well as it fell today and is closing lower for the week.

The final numbers are showing:

• Dow Industrial Average average -57.94 points or -0.15% at 38589.15
• S&P index -2.14 points or -0.04% at 5431.61
• NASDAQ index rose 21.32 points or 0.12% at 17688.88

for the trading week:

• Dow industrial average fell -0.54%
• S&P index rose 1.58%
• NASDAQ index rose 3.24% which was its largest weekly gain since April 22.

The small-cap Russell 2000 did not fare as well today or this week. On the day, the index fell -32.75 points or -1.61% at 2006.15. For the trading week, the index fell -1.00%:.

Some big winners this week included:

• Broadcom, +23.35%. The company announced earnings and also a 10:1 stock split
• Adobe +12.87%. They announced their earnings which beat expectations and raised guidance as well
• CrowdStrike: +10.45%. They too announced better-than-expected earnings
• Shopify, +9.87%
• Super Micro Computer, +9.81%
• Nvidia, +9.09%
• Micron, +7.96%
• Apple, +7.925 on the back of Worldwide Developers Conference. Technically, the stock broke outside its $165 to $200 trading range that has confined the pair since April 2023
• Lam Research, +7.61%
• Home Depot +6.04%
• Palo Alto networks, +5.10%

Some big losers included:

• Celcius -17.87%
• Trump Media, -17.2%
• Raytheon, -17.17%
• Paramount, -15.32%.
• Beyond Meat, -12.52%

This article was written by Greg Michalowski at www.forexlive.com.

It’s no surprise that euro longs are bailing with all the turmoil in France. We saw how much in the latest CFTC data, which covers futures up to Tuesday’s close.

Net spec longs fell to 44K contracts from 67K. I wouldn’t be surprised if more cashed out later this week due to the pain hitting French bonds.

The other notable moves in the IMM report were large jumps in AUD spec shorts and particularly in CAD spec shots which jumped to 129K from 92K.

This article was written by Adam Button at www.forexlive.com.

RBC says the decision for the Bank of Canada to cut rates as the country has underperformed global peers on a per-capital basis for more than a year. Theyalso say that’s why it’s easier to envision the BOC on a sharper path of easing than other G10 central banks.

They envision the Bank of England cutting in August but expect a slow pace after that, with only 100 bps by the end of 2025 and a similar pace from the ECB. They don’t see the Fed easing until December.

For the Bank of Canada, they envision a second 25 basis point cut in July, something I talked about yesterday on BNNBloomberg.

Market pricing currently reflects 55 basis points in further easing in Canada this year.

This article was written by Adam Button at www.forexlive.com.