Week of june 9

The week featured a series of major events, including the ECB and BOC's rate decisions, the US NFP, and inflation data from the Eurozone.

The coming week sees US CPI figures as the highlight, with a host of UK data, including GDP and employment data.

Week in Review

Trade issues remained a major point of concern during the week, despite a solid economic calendar. Expectations surrounding a call between US President Donald Trump and Chinese President Xi Jinping, which occurred on Thursday, kept traders on their toes. However, the lack of details from the conversation left investors somewhat concerned about the slow progress in trade negotiations. Meanwhile, the US trade deficit was surprisingly smaller than expected, with exports expanding more than economists had projected and imports shrinking as expected.

In Europe, the ECB cut rates by 25 basis points, as widely expected. However, the statement and President Christine Lagarde were interpreted as surprisingly hawkish, with one member voting to keep rates unchanged in an unusual dissenting position. Meanwhile, Eurozone inflation came in at a headline rate of 1.9%, below the 2.0% expected. In trade matters, Germany's trade surplus came in lower than anticipated, driven by an unexpected drop in exports and a larger-than-anticipated increase in imports.

North of the US, the BOC kept rates on hold, as expected. However, Governor Tiff Macklem maintained a relatively pessimistic tone, saying that he would keep a close eye on the CPI figures over the next two months, as he is concerned about inflation volatility.

Across the Pacific, Australia's GDP slowed to 0.2% in the first quarter, down from 0.6% in the prior quarter. Meanwhile, the April trade surplus was lower than expected, as exports declined by 2.4%.

In geopolitics, a surprise result of the presidential election in Poland saw nationalist candidate Karol Nawrocki win by a small majority. Elsewhere, the far-right leader of the Netherlands, Gert Wilders, withdrew from the ruling coalition, causing the government to collapse and potentially leading to early elections. Finally, drama escalated in Washington over the yet-to-be-passed budget bill, with a fallout between Trump and former DOGE head Elon Musk capturing financial media attention.

Biggest Market Movers

• Silver surged more than 10% to a 13-year high as traders noted demand overtaking supply and a weaker dollar throughout the week.
• The dollar trended lower through the course of the week, sliding after disappointing ISM PMI figures on Monday amid concerns around the passage of the spending bill.
• Expectations of a potential easing of trade conditions helped support commodity currencies, with the Aussie and Kiwi gaining 1%+

Top Events in the Week Ahead

In the coming week, markets will likely be focused on the May CPI, scheduled for release on Wednesday.

Inflation Expected to Rise in the US

Inflation in the US is expected to reaccelerate to 2.5% from its previous rate of 2.3%. However, the core rate is projected to moderate at 2.9% compared to 2.8% previously. The rise would break a 4-month deceleration, marking the highest since February, as analysts factor in the expected impact of tariffs on consumer prices. After failing to surpass $3400 an ounce once again, gold could reaccelerate towards its record peak above $3500, with support sitting at $3200.

China Trade Balance in Focus

China's trade balance is expected to be released on Monday, showing a decline in the surplus to $70 billion in May from $96.2 billion in April. Exports are expected to have declined by 4.0% in the month, while imports are seen at -0.3%. The Australian dollar might react to the report, with notable levels on AUDUSD at 0.64 and 0.6550.

Steady as She Goes for the UK

On Tuesday, UK job figures are expected to show that the labour market remains relatively tight, with the unemployment rate projected to stay unchanged at 4.5%. Monthly GDP growth for April is also projected to remain relatively steady at just +0.2%, the same as in March, with the rolling three-month figure declining slightly to 0.6% from 0.7% prior. As it struggles to break through the 1.36 handle, the pound could pull back somewhat if the readings disappoint, with support at 1.3458 and 1.3370. On the flip side, taking over 1.36 could see prices extend to 1.3660.

Other Events, Earnings

Monday has Japan's final Q1 GDP figures. Tuesday includes Australian Westpac consumer confidence and NAB business confidence figures. Japanese machine tool orders come out on Wednesday. For Thursday, US PPI is expected. Friday sees the release of the Eurozone trade balance, as well as the University of Michigan consumer sentiment index.

On the earnings front, a relatively light calendar features notable names reporting, including GameStop, FirstGroup, Tesco, Oracle, Haleon, and Adobe.