Bank of England Preview

BoE call. We expect the Bank of England (BoE) to hike the Bank Rate (key policy rate) by 25bp on 22 June, bringing it to 4.75%. This is in line with markets expectations. We expect a slight hawkish shift in communication given the latest releases showing increased persistence in inflation and a tight labour market. However, we do not expect it to live up to market expectations.

Gold Trapped in a Narrow Range, What's Next?

After almost touching a record high last month, gold prices have corrected lower, trampled under the weight of rising yields and a resurgent US dollar as markets priced in a higher-for-longer scenario for Fed rates. These forces could keep bullion under pressure for now, although in the bigger picture, the trend of sovereign buying by central banks and nerves around a recession might be enough to propel gold to new heights.

Weekly Economic & Financial Commentary: Fed Not on Summer Break Quite Yet

This was a busy week for markets and monetary policymakers alike, as a healthy slate of economic data was accompanied by an FOMC meeting. On balance, the data were consistent with slowing inflation and output growth, but at a gradual rather than sudden pace.

Forex and Cryptocurrencies Forecast

The key events of the past week were the meetings of the Federal Open Market Committee (FOMC) of the US Federal Reserve on Wednesday, June 14, and the European Central Bank's Monetary Policy Committee on Thursday, June 15. The outcome of these meetings resulted in a decisive victory for the euro over the dollar.

Quiet Start to the Week

Today is rather quiet with only US NAHB housing index worth noting. Surprisingly, the US housing market has shown tentative signs of bottoming in recent months. We may also get more news on the visit by US Secretary of State Anthony Blinken to Beijing.

US Markets Closed for Juneteenth Holiday

 US markets are closed for the Juneteenth holiday. In the EMU there no important data. ECB’s Lane, Schnabel, Villeroy and Guindos will speak. We expect the downside both in US and EMU/German yields to remain well protected. After last week’s break higher, EUR/USD might develop a further buy-on-dips pattern. The cycle top at 1.1095 remains the key reference.

Euro Drifting Lower on US Holiday-Thinned Trading

The euro has started the week quietly. EUR/USD is trading at 1.0917, down 0.22%. There is a bank holiday in the US and no eurozone releases on the calendar, which should mean a calm day for the euro.

Crypto May Be Ready for a New Leg Down

The crypto market capitalisation rose 1.5% last week to reach $1.066 trillion at the start of the new week. But it wasn’t a smooth ride, as Bitcoin gained 2% last week to end the week down 4% at around $26,500. Ethereum lost 1% to $1730. Other leading altcoins in the top 10 fell between 0.4% (TRON) and 6.4% (XRP). The exception was BNB (+2.6%).

Oil: Short-Term Bounce Rather Than New Bull Market

Last week, WTI tested its 200-week moving average for the fifth time since the beginning of the year but managed to bounce back from this level. Accumulated oversold conditions in oil on the intraday timeframe and hopes of demand stimulus in China worked in favour of the bulls at the start of the week. In the second half of the week, a falling dollar and demand for equities supported interest in risk assets, including oil.

Sunset Market Commentary

ECB members filled today’s dull trading hours awaiting possible fireworks later this week. Comments coming from Frankfurt since last week’s 25 bps rate hike all point to the same scenario: firm backing to continue hiking in July, but more hesitance on the September outcome. Lack of unanimity on how to proceed from there logically explains why ECB President Lagarde kept all options last week during the Q&A session.