What BOC Surprise Could Mean For Fed

The BOC really shocked markets back on Wednesday when it hiked rates by 25bps. Pretty much everyone was expecting it to be a non-event. Given Canada's unique position, the move impacted how many analysts viewed central banks around the world. The number of traders expecting a "skip" at the next Fed meeting dropped dramatically (though it's still a majority).

Week Ahead – Time for Fed But First, It's US Inflation

The main event of the week is the FOMC decision, but before we get there, the May inflation report should show that inflation is cooling.  Pricing pressures should ease as gasoline prices tumble and as demand destruction starts to become apparent in the data.  The negative base effects start to help send the headline year-over-year inflation reading closer to 4.0%.

Weekly Economic & Financial Commentary: Fed Weighs a Potential Pause at Next Week's Meeting

We see the most likely outcome for next week's meeting as the FOMC making no change to its policy rate, but making clear that another hike at its July 26 meeting remains a distinct possibility.

XAU/USD: Historical Overview and Forecast Until 2027

Gold is one of the favourite trading instruments of the most successful traders at NordFX. This can be easily confirmed by looking at the monthly rankings published by this brokerage company. That is why it is appropriate to provide a special review, focusing solely on the XAU/USD pair.

Major Central Bank Week

It is major central bank week. On Wednesday, we expect the first unchanged decision from the Fed since January 2022, but it is not a done deal and markets are pricing a chance of another 25bp hike. An ECB hike of 25bp on Thursday is fully expected as well as a decision to end APP reinvestments, but we will get new staff projections and policy signals. We do expect Bank of Japan to tighten policy by easing its yield curve control during this year, but the meeting on Friday is likely too soon.

A Busy Week for Central Banks

Across the Atlantic Ocean, the European Central Bank (ECB) is expected to hike its interest rates by 25bp when it meets on Thursday, while the Bank of Japan (BoJ) is expected to keep its policy rate at the negative territory despite the rising inflation.

There's a Tail Risk Scenario to See Last-Minute Change of Heart at Fed

With June CPI figures (tomorrow) still to be released and with a large minority already in favour of continuing the tightening cycle, there’s a tail risk scenario to see a last-minute change of heart at the Fed nonetheless. We’ve seen the same thing happening early in the normalization cycle when eco data in the week running up to the meeting overturned guidance to hike by 50 bps to conduct a 75 bps hike instead.

Australian Dollar Keeps Rolling, Aussie Confidence Data Next

The Australian dollar continues to rally and is higher on Monday, trading at 0.6766, up 0.33% on the day. The Aussie is coming off an excellent week with gains of 2.1%. Will the rally continue?

GBP/USD Drifting, Markets Eye UK Employment and US CPI Data

The UK labour market has proven resilient to the BoE’s aggressive tightening cycle. Perhaps too much of a good thing, as inflation remains sticky, although it did fall to 8.7% in May, down from 10.1% in April. The good news for the BoE is that the labour market appears to be cooling, and that should help reduce inflation.

Sunset Market Commentary

Technical considerations dominated trading in the major FX cross rates as well. EUR/USD extends its recent bottoming pattern. The 1.0790 area was again tested but upcoming event risk prevented a break (currently 1.077).