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Mortgage applications in the United States increased by 1.1%, in contrast to a decrease of 2.6%.
Mortgage applications in the United States increased by 1.1% as of June 20, recovering from a previous drop of 2.6%. This indicates a shift in the mortgage market from its earlier downward trend.
The EUR/USD exchange rate is approaching its 2025 peak of 1.1640. The Euro’s rise is linked to the weakening of the US Dollar, showing a return to a risk-on trading atmosphere.
EURUSD and GBPUSD see modest declines after hitting new highs amid market uncertainty.
The EURUSD and GBPUSD both fell after reaching new highs yesterday, but the declines were small. On the other hand, USDJPY saw an uptick, recovering some of the sharp losses from previous days. A video analysis highlighted important technical levels and risk indicators for these currency pairs.
During a recent meeting, the Bank of Japan (BoJ) reported that while the data from April and May appeared strong, the effects of US tariff policies are still developing. Economic uncertainty remains high, especially regarding trade tensions. Japan’s economy is trying to grow while managing the risks of stagnation. Despite the pressure from US tariffs, the BoJ aims to keep fiscal conditions loose, maintaining low-interest rates.
BoJ policymaker Naoki Tamura acknowledged rising inflation risks in Japan, with prices increasing faster than expected. He hinted at the possibility of a future rate hike to tackle these inflation pressures. However, he doesn’t see an immediate need for a rate increase, depending on how tariffs evolve.
Meanwhile, Fed Chairman Powell discussed the potential for a rate hike in July if inflation stays low. He expects the impact of rising tariffs to materialize in June or July, which could influence decisions on rate changes. The Fed might lower rates in the future based on economic conditions.
Reports on crude oil inventories showed mixed results: crude oil fell by 4.277 million barrels, while gasoline rose by 764,000 barrels. Currently, crude oil prices are up by $0.25 or 0.37%, supported by decreased tensions in the Middle East and expectations of higher future supply. US stock indices are showing gains in premarket trading.
US debt market yields experienced slight increases after recent drops:
– 2-year yield at 3.803%, up 1.9 basis points
– 5-year yield at 3.874%, up 1.8 basis points
– 10-year yield at 4.314%, up 2.1 basis points
– 30-year yield at 4.854%, up 2.3 basis points
As the broader market adjusts to slower momentum in key currency pairs, the slight retreats in the euro and pound after their recent highs are important to analyze. These small pullbacks are not signs of a trend reversal, but they indicate that the bullish momentum might be losing strength for now. When both pairs hit new highs and then eased off without significant volume, it suggested profit-taking rather than a structural shift. The moves stayed above critical support levels, meaning the bullish outlook is still intact, just on hold.
In contrast, USDJPY has slightly increased, reversing some of its earlier week’s sharp decline. This rebound is intriguing as it comes without substantial changes in macroeconomic data. Instead, it appears driven by market sentiment—investors may be repositioning after the BoJ’s uncertain policy signals. This bounce has surpassed a short-term technical barrier and is helping to repair gaps from the previous drop. While this isn’t a strong bullish signal, it does provide some stability to the market.
From the central banking perspective, Tamura’s statements indicate growing concern in Tokyo about domestic inflation. He reaffirmed support for current interest rates but noted a theoretical rate hike could occur if inflation does not stabilize—specifically, if it exceeds the Bank’s projections by a significant margin. This places the BoJ in a wait-and-see approach, leaning slightly more hawkish than last quarter.
Powell, meanwhile, provided a nuanced outlook reflecting recent uncertainties in U.S. economic data. He did not rule out a rate cut, but the focus appears to be shifting away from immediate actions. His perspective depends on the upcoming effects of tariffs, which he anticipates will appear in the data by June or July. Thus, any significant rate cuts seem unlikely in the near term, implying limited adjustments for now, while also suggesting Treasury markets may remain unsettled as investors await more clarity.
Interest rates across the U.S. yield curve have edged up moderately, with slight increases across key maturities. This movement is not news-driven but part of a technical recovery after several days of declines. The 2- and 5-year yields moved similarly, while the 10-year and 30-year yields rose a bit more. The larger increases at the longer end often indicate shifts in inflation expectations. We interpret this as a minor realignment following Powell’s comments—there’s no indication of new macro risks, just adjusted timelines.
Oil prices have risen slightly, mainly due to improved supply expectations rather than Middle East concerns. The decrease in crude inventories was countered by an increase in gasoline stocks, keeping oil’s risk premium steady. There is no aggressive push for energy contracts as seen during geopolitical crises, indicating traders are anticipating a more relaxed supply scenario ahead.
U.S. equity markets are cautiously optimistic, with futures rising in premarket trading, linked to economic indicators showing no immediate downturns. The index movements are small—no significant breakout patterns—but they contribute to a positive sentiment.
For those monitoring derivatives markets, this situation encourages a careful approach. With implied volatility in most G7 FX decreasing and central banks providing shorter guidance, market positioning should favor carry-friendly strategies with clear risk limits. Option premiums are not high, and short-dated contracts are expected to remain cost-effective until data prompts a repricing. The upcoming data over the next two weeks will be particularly crucial, and a clear directional bias should only surface following strong signals from important economic reports. Until then, patience and clarity are more important than fast or large moves.
XAU/USD consolidates around $3,325 during European trading, lagging behind the 20-day EMA amid a risk-on rally
Gold prices are having a tough time gaining strength as a general risk rally lowers the need for safe-haven assets. The news of a ceasefire between Israel and Iran has made riskier investments more appealing, leading gold to stabilize at around $3,325 during European trading hours.
Jerome Powell, from the Federal Reserve, stated that current monetary policy is suitable despite uncertainties tied to tariffs. His comments have reduced expectations for an interest rate cut in the upcoming July meeting, putting additional pressure on gold prices, as higher interest rates usually hurt non-yielding assets.
Technical Analysis Of Gold
On a daily chart, gold is forming an Ascending Triangle, indicating reduced volatility. The gold price is currently below the 20-day Exponential Moving Average, suggesting a bearish trend in the short term, while the 14-day Relative Strength Index shows a sideways movement. If gold breaks above $3,500, it might enter new territory, facing resistance at $3,550 and $3,600. However, if it drops below $3,245, the price may fall to $3,200, with additional support at $3,121. Central banks continue purchasing gold to diversify reserves and enhance economic trust, especially in uncertain times. While the short-term outlook for gold seems dull, it mainly reflects a change in broader market risk preferences. With easing tensions in the Middle East due to confirmed efforts to halt hostilities, investors are slowly moving away from traditional safety assets. Riskier investments are returning to portfolios, reducing gold’s appeal and impacting its prices. Powell’s comments about policy stability, just before summer central bank decisions, have dampened market excitement about a near-term rate cut. His steady tone, even amid possible trade disruptions, suggests that those hoping for a rate cut may need to wait longer. This policy stability, even if not strongly hawkish, raises the challenge for gold to recover. Historically, real yields and gold do not pair well: as the cost of holding gold rises, demand decreases.Gold’s Market Outlook
Looking at the charts, the situation is clearer than it seems. Prices are caught in a narrowing range. The Ascending Triangle indicates underlying tension, suggesting energy is building for a future breakout. However, until the upper resistance is broken, it simply points to uncertainty. The immediate theme looks more like consolidation than reversal or breakout. Momentum indicators, particularly the drifting RSI, support this idea. There’s no urgency in the current technicals. However, key levels persist. If gold can break decisively above the $3,500 barrier, new flows may enter, especially from funds that have been inactive since March. Higher levels, such as $3,550 and $3,600, will require fresh catalysts to maintain any gains. On the downside, the scenario evolves more quickly. If the price falls below $3,245, it could drop swiftly to $3,200, and if it loses that, it may continue down to $3,121, where long-term buyers have previously stepped in. Beyond the charts, underlying demand is noteworthy. Central banks are steadily accumulating gold—not out of fear, but with quiet determination. Their purchases serve two purposes: diversifying reserves and projecting financial stability. Though these flows might not influence immediate prices, they shape the market’s underlying structure. While they can’t prevent all pullbacks, they gradually tighten support. Ultimately, our approach to positioning will depend on monitoring pressure points above and below, responding to both geopolitical signals and policy expectations. We should remain agile. While the tempo might be building, the next move’s direction hasn’t yet revealed itself. We need to be prepared for any outcome without making assumptions about certainty. Create your live VT Markets account and start trading now.Markets remain stable as attention focuses on Powell’s testimony and new home sales today.
US equity futures and foreign exchange markets are mostly stable, with a slight drop in the yen. Treasury yields have risen a bit after three days of decline.
Federal Reserve Chair Powell will continue his testimony in the Senate at 10 am ET. His cautious approach has lowered expectations for any major market changes. This sentiment was also expressed by KC Fed President Schmidt in a recent speech.
Economic Calendar
Today’s economic calendar has limited data releases. New home sales numbers will be released at 10 am ET, followed by US weekly oil inventory data at 10:30 am ET. After three volatile trading sessions, financial markets appear calm on the surface, but underlying tensions still influence direction. With US equities hardly moving and foreign exchange exhibiting little change—except for a minor decline in the yen—markets seem to be taking a break. However, this pause is unlikely to last. Treasury yields have nudged up slightly, marking a shift from earlier declines this week. This doesn’t indicate a new risk appetite but rather a quiet retreat from safe-haven investments, likely driven by positioning rather than strong conviction. While this change doesn’t warrant a broad market response, it’s important to keep an eye on trends, especially as month-end rebalancing flows can distort market sentiment. Powell’s return for his second day of Congressional testimony today hasn’t unsettled traders. His recent message of patience regarding rate changes has been clear. This expectation was reinforced by Schmidt earlier this week, supporting a careful stance. We see this alignment as a signal for those focusing on the dot plot rather than headlines. The Fed currently shows no desire to preemptively change rates without more confirmation from inflation trends.Trading Perspective
With limited new economic data today, especially during the morning session, attention naturally shifts to secondary indicators. New home sales may have some influence, but they are unlikely to significantly change core rate assumptions unless they are drastically different from expectations. Crude oil inventory data could cause some volatility in energy sector stocks, but significant market-wide impacts are unlikely unless there is a major surprise. From a trading standpoint, implied volatility remains low across most asset classes, especially for short-term metrics. This situation suggests that sellers of premium feel secure, although they may face risks if unexpected data or policy miscommunication arises. We are not broadly reallocating risk but are remaining flexible. Directional strategies may struggle in this slower environment, making short gamma positions more appealing in the near term, as long as headline risks are managed. With no strong directional catalysts on the horizon and Fed communication being steady, the outlook appears relatively limited. For those making positioning decisions, opportunities may be better found in short-duration spread trades or sector shifts, where we’ve noted mispricing following earnings reports. A careful approach is needed when the macro environment lacks clarity, especially as markets start to adjust to summer liquidity conditions. Create your live VT Markets account and start trading now.Commerzbank analyst Volkmar Baur comments on Australia’s recent monthly inflation figures, suggesting that the inflation situation is clear.
Australia has released its latest inflation data, showing a year-on-year rise of 2.1%. This matches the Reserve Bank of Australia’s target range and supports their recent decision to lower interest rates.
The inflation report revealed that service prices have fallen to 3.29%, the lowest in three years. The central bank is keeping a close eye on this area due to the tight job market.
Trimmed Mean Inflation Trends
The trimmed mean inflation, which leaves out unstable items, has dropped to 2.4% year-on-year, the lowest since late 2021. This decline indicates a positive trend that could allow for another interest rate cut on July 8. The market has largely anticipated this possible rate cut, which may not significantly affect the Australian Dollar. Recent economic data shows trends in inflation and has sparked discussions about monetary policy choices. Current data shows that Australia’s price growth is steadily slowing and is now comfortably within the central bank’s target. With headline inflation at 2.1%, it’s exactly where policymakers want it for the medium term, giving them more flexibility in their decisions. This outcome was expected as analysts had forecasted this result. Service sector inflation has reached a three-year low. This is notable, especially since service prices tend to be resistant to change in a tight job market. The 3.29% figure indicates easing pressure, despite a labor market usually contributing to price stickiness. Lowe and his team have stated that this area is significant to them, and the decrease could increase their comfort with cutting policy rates further.Forward Looking Analysis
The trimmed mean figure is crucial for analyzing future trends. Ignoring volatile items like fuel and food, the current 2.4% is the quietest since late 2021. This timeframe is important because it coincides with the beginning of rising price pressures, and now we are seeing a return to that level. This specific indicator is closely monitored by the central bank as it reflects underlying price behaviors instead of one-time shocks. Due to these readings, expectations have shifted strongly towards another rate cut as soon as July 8. The market has already priced this in. Futures markets show little change since the release, indicating traders were updated on expectations. Next steps are not straightforward. We should approach any trades involving the Australian Dollar with caution. Although lower rates seem likely, any significant movement in AUD pairs may depend more on outside factors than on local policies. Also, we should consider volatility premiums. With monetary policy becoming clearer in the short term, implied volatility across the AUD market hasn’t really changed. It’s likely we won’t see much market response unless there is unexpected foreign data or significant shifts in domestic consumption or wages. Traders are not anticipating large price swings. As we move into early July, it’s wise to focus on delta-neutral or moderately leveraged option structures. The current curve indicates traders are expecting lower policy rates. This situation makes binary outcomes less attractive unless your predictions greatly differ from the consensus. For now, long-duration strategies or calendar spreads seem more appropriate. One final note: cross-asset correlation isn’t providing much clarity either. Equity markets have not reacted strongly, bond yields have fallen on the short end, and the currency is staying within a narrow range. Currently, there’s no strong divergence for those looking at relative values. A surprise increase in data or an unexpected downturn in the labor market might be needed to shift sentiment regarding the central bank. Thus, the focus remains reactive rather than predictive at this moment. Rate traders have narrowed their attention to just a few key meetings. This limits both opportunities and risk management. We recommend closely monitoring positioning, especially before policy speeches or budget updates. Create your live VT Markets account and start trading now.Mortgage applications rise by 1.1% despite slight increase in rates and earlier declines
US MBA mortgage applications for the week ending June 20, 2025, rose by 1.1% after a 2.6% drop the week before.
The market index climbed to 250.8 from 248.1. However, the purchase index fell to 165.2, down from 248.1. The refinance index increased to 713.4, up from 692.4.
The average 30-year mortgage rate went up to 6.88%, slightly higher than the previous week’s 6.84%. Mortgage applications generally fall when mortgage rates rise.
The data comes from the Mortgage Bankers Association, which tracks mortgage activity in the United States. The latest report shows a slight increase in total mortgage applications, but this was mainly due to refinancing, not new home purchases, which decreased.
The purchase index’s drop from 248.1 to 165.2 is significant and contrasts with the slight rise in the overall market index. This suggests that potential homebuyers may be hesitating due to higher borrowing costs. In contrast, refinance applications are on the rise, showing that some homeowners are willing to take action even with higher rates—either anticipating further increases or hoping to improve their loan terms.
The mortgage rate increase from 6.84% to 6.88% is small but notable. Even minor changes in rates can impact buyer sentiment, especially for those with tight budgets or limited credit. The trend of mortgage rates moving opposite to application activity remains clear, especially for purchases.
For those trading interest rate derivatives, the key takeaway is that refinancing demand is responsive to even small rate changes. This behavior might lead to noticeable market movements when rates shift. The contrasting trends in refinancing and purchasing could create short-term opportunities for traders.
It’s essential to watch whether these shifts in mortgage behavior affect swap spreads or short-term options. A continued drop in purchase demand could tighten credit conditions, leading to adjusted expectations for future rate cuts. Monitoring Fed Funds futures might provide additional insights.
Kan emphasized the importance of rate sensitivity in borrower decisions. This perspective is useful for understanding convexity hedging and impacts on the mortgage-backed securities market. Asset managers might change their duration hedges, while those selling volatility could recalibrate their positions if refinancing activity surprises on the upside.
Despite tight mortgage lending conditions, these trends provide insights into broader credit behavior, which impacts the bond market. Changes in longer-term rates affect home affordability, with more focus on refinancing than on new purchases. Fixed income teams may need to adjust their strategies in response to these trends in the coming week.
The direction of 30-year mortgage rates remains a crucial factor in forming future expectations. If rates rise again and refinancing demand stays strong, there could be a shorter window for borrowers to act, which might align with potential rate cuts later this year.
We’ll continue to watch how interest rate curves respond to both future guidance and real-world signals.
The US dollar strengthened as the yen fell, amid uncertainty about the BoJ’s monetary plans.
The US Dollar gained strength as concerns grew about how long a ceasefire in the Middle East would last. The Yen weakened after the Bank of Japan signaled it would delay tightening monetary policy.
Monetary Policies and Market Reactions
Investor risk appetite declined when it became clear that Tehran’s uranium enrichment plans were only temporarily paused. This uncertainty adds to doubts about the future of the ceasefire. At the Bank of Japan’s recent meeting, differing opinions emerged due to worries about Trump’s tariffs. This may result in delaying monetary tightening to keep policies supportive. In the US, Fed Chair Jerome Powell is cautious about rate cuts despite pressure from President Trump. Recent weak consumer sentiment data has raised expectations for two rate cuts this year. Central banks adjust policy rates to ensure price stability. The US Fed, ECB, and BoE aim for a 2% inflation target. When inflation strays from that target, central banks modify interest rates to manage it. An independent board makes the decisions on policy rates. Members have different views: ‘doves’ support low rates, while ‘hawks’ prefer higher rates. A chairman leads the meetings to foster consensus.Market Dynamics and Rate Expectations
Recently, the US Dollar has been gradually strengthening as concerns about the ceasefire in the Middle East rise. Geopolitical issues typically create market volatility; however, this situation has raised doubts across various asset classes, increasing demand for safe havens like the Dollar. In Japan, the story is different. After the latest Bank of Japan (BoJ) meeting, Governor Ueda’s comments showed disagreement among board members regarding external trade tensions, especially due to the previous US administration’s tariff strategy. Traders were looking for hints that the BoJ might begin tightening policy, signaling an end to ultra-loose conditions. However, with the BoJ leaning towards delaying this shift, the Yen has weakened, showing how expectations for rates influence its value. Broadly speaking, central banks continuously aim to balance inflation targets while avoiding excessive strain on the economy. These institutions don’t just react to inflation numbers; decisions stem from thorough internal discussions with diverse opinions among voting members. Some urge quick action on inflation, while others call for patience, especially amid uncertain global demand. In the US, Chair Powell has chosen not to let political pressures dictate policy decisions. Even though President Trump has previously expressed frustration with the Fed’s pace of rate changes, the Fed remains committed to a data-driven approach. Recent consumer sentiment data, which has fallen short of expectations, gives the market fresh reasons to speculate on possible rate cuts—possibly two by year-end if future data supports this. It’s important to note that the market responds to more than just outcomes; it also considers tone and phrasing. Powell, careful in his messaging, does not make promises but keeps possibilities open. This suggests that interest rates could decrease sooner than previously expected as economic signals shift from strong to uncertain. Meanwhile, Europe remains relatively calm for now. The ECB is cautious about ongoing inflation differences among member countries while managing southern Europe’s recovery alongside Germany’s recent slowdown. The Bank of England is facing stubborn inflation, which may limit its options; adjusting rates could feel premature. For short-term trading strategies, these developments require nuance. Simply betting on rate movements may overlook important shifts in forward guidance or inflation expectations. Volatility might increase not just from unexpected data, but due to differing views among board members or changes in how the market anticipates future rates. Remarks made during press conferences can be just as crucial as the decisions made, offering early insights. Traders will need to adjust their strategies based not only on interest rate forecasts but also on how those expectations evolve. Cross-currency strategies particularly may benefit from these mismatched rate paths. For instance, the growing spread between US and Japan interest rates could continue to support Dollar strength unless the BoJ provides clearer signals. Conversely, assuming the Fed will cut rates without supporting data requires agility—upcoming CPI and labor data will be important indicators to watch. In such scenarios, calendar spreads and gamma plays could gain appeal. We recommend closely monitoring implied volatility skews and changes in open interest around Fed and BoJ meetings, as these often signal shifts in sentiment before actual rate movements. In summary, what we observe and when we act could significantly impact future returns. Create your live VT Markets account and start trading now.The USD/JPY pair shows slight gains as it retraces amidst overall market stability while awaiting data.
The USD/JPY pair saw a small increase during European morning trading, bouncing back from an earlier drop. This decrease happened as tensions eased between Iran and Israel, along with a softer stance from the Federal Reserve’s Bowman. The pair fell from 148.00 to about 144.50 but has now climbed back to 145.60.
Currently, the pair is above 145.00 and has passed its 200-hour moving average at 145.15. This rise gives buyers a chance to reach the 100-hour moving average at 145.70. Staying below this level keeps things neutral, while moving above it could signal a bullish trend.
Resistance Levels
Nevertheless, the 38.2% Fibonacci retracement level at 145.85 and other resistance near 146.00 might limit further gains. No significant updates are expected from Powell’s testimony in Congress, shifting attention to US data due tomorrow. The recent increase in USD/JPY appears to be a minor bounce, with little activity in broader markets. The EUR/USD is holding steady at 1.1598, and the dollar is showing little movement elsewhere. Additionally, 10-year Treasury yields are stable at 4.295%, and S&P 500 futures are not showing major changes. The USD/JPY pair’s morning rebound during European trading suggests a slight correction instead of a major shift. Earlier selling pressure, caused by easing geopolitical risks and Bowman’s cautious messaging, led to a sharp price drop. Despite this, support near 144.50 held firm, and the recent rise above the 200-hour average at 145.15 has drawn interest back upward. Technically, this move allows for breathing room toward the 100-hour average at 145.70, though that level hasn’t been broken yet.Market Activity
We see this price action as consolidation rather than a change in sentiment since the broader market shows little new energy. Powell is unlikely to introduce new information today, providing little reason for markets to reposition ahead of tomorrow’s data release. As the 38.2% retracement level at 145.85 caps movement, we don’t expect a solid advance unless there’s a clear move through this zone toward 146.00. Currently, market flows lack conviction, and short-term momentum is unconvincing. The slight rise in the pair seems driven more by the absence of new sellers than by increased demand. Overall price activity supports this, as other crosses and major pairs remain relatively quiet. The ten-year yield holding steady at 4.295% offers little fresh direction to rate differentials. For those looking at short-term opportunities, the 145.70 and 145.85 levels are important. If these levels are not reclaimed with momentum, positioning could tighten as the week approaches data-driven decisions. We do not anticipate a bullish extension unless sellers reappear higher in the order book. Overall levels are more crucial than headlines in this scenario. Futures for the S&P 500 remain flat, adding to the subdued global risk atmosphere. This quiet backdrop suggests caution. We view the current USD/JPY movement as minor consolidation, with any further action needing stronger inputs rather than mere assumptions. Create your live VT Markets account and start trading now.Recent hearing with Fed Chairman Jerome Powell offers few new insights
Fed Chairman Jerome Powell’s recent hearing before the US House did not reveal many new details. He emphasized the need to observe the effects of US trade policy before making changes to monetary policy and noted that tariffs have had a milder impact on inflation than expected.
There is growing talk about potential interest rate cuts. Michelle Bowman from the Board of Governors suggested that cuts could happen in July if inflation stays low, which could weaken the US dollar. Governor Christopher Waller mentioned that the federal funds rate might be about 1.25 to 1.5 percentage points above the neutral level.
The Federal Reserve’s Rate Strategy
Some officials prefer to be cautious about changing interest rates. The Kansas City Fed president and Federal Reserve Governor Michael Barr share Powell’s view of waiting to see the impact of tariffs first, pointing out the economy’s strong position. If inflation remains stable and unaffected by tariffs, discussions about rate cuts may heat up by July. The Fed might also foresee additional cuts of around 12 basis points by the end of the year, especially if there’s a shift in consensus among members. This developing situation poses challenges for the US dollar. This article explains how the Federal Reserve is evaluating when and how much to lower interest rates, with Powell mainly adopting a wait-and-see strategy based on data. The effects of trade policies, especially tariffs, on inflation and the economy are under close examination. While initial fears suggested that these tariffs might lead to significant price increases, Powell minimized that concern, indicating they are having a softer effect than anticipated. This keeps the possibility of holding rates steady open. However, other Fed officials are showing more immediate movement. Bowman hinted that rate cuts could start as soon as July if inflation holds steady. This view aligns more with market expectations, which are leaning towards quicker easing measures. We have already seen the dollar weaken as market participants adjust their forecasts. Waller contributed a technical perspective, noting that policy rates are likely still above the neutral point by over one percentage point. This suggests there is some room to lower borrowing costs without entering strict stimulus territory. The focus now shifts from the direction of rates to the urgency of those changes.Market Reactions and Projections
Other committee members, like Barr and George, remain skeptical about making preemptive moves. They prefer to monitor how the economy reacts to tariff policies over time, embodying a cautious approach. However, Barr’s comments on the economy’s strength indicate the Fed is not feeling urgent growth risks. As we approach the July meetings, what happens in the meantime is crucial. Inflation data will be key. If consumer prices remain steady, the more dovish members of the Fed are likely to gain influence. Current projections suggest about 12 basis points of easing by year-end, but that could change with shifts in sentiment. In the coming sessions, we should pay close attention to market movements at the front end. Any adjustments there can signal changes in consensus. The relationship between real yields and inflation expectations may provide insight into how deep cuts are being factored in. If volatility increases in short-term instruments, especially swaps or fed funds futures, we should see that as an early signal rather than a delay. Differences among committee members often get reflected in the markets first, followed by official statements later. How long this tension persists or eases may guide our next steps. Create your live VT Markets account and start trading now.Canadian inflation figures match predictions with a slight month-on-month rise, analysts say
Canadian inflation rates recently met expectations, with only a slight increase observed in the month-on-month rates. However, this is not concerning, as Canada has kept inflation under control, unlike many other Western nations.
The Canadian dollar (CAD) has been fairly stable, mostly reacting to the weaker US dollar (USD). The USD/CAD has dropped by about 8 cents since its peak earlier this year.
