Key central bank decisions and economic data to drive FX and commodity markets this week.
FOMC Minutes Reinforce Hawkish Bias Amid Elevated Inflation
The Federal Reserve's June minutes underscored a hawkish pivot under new Chair Kevin Warsh, signaling sustained focus on price stability. The dot plot revision showed nine officials projecting rate hikes in 2026, up from zero in March, with the median forecast rising to 3.8%. Markets now price a sub-20% chance of a July hike, down from over 30%, as traders digest the Fed's emphasis on inflation risks over labor market concerns.
US ISM Services PMI Signals Modest Growth Amid Price Pressures
S&P Global's June flash services PMI rose to 51.3, a four-month high, but highlighted an economic bifurcation. While manufacturing showed resilience, services growth remained sluggish, driven by elevated prices and weak demand. Input cost inflation hit a six-month high, pressuring corporate margins and supporting rate hike expectations.
RBNZ Poised for Rate Hike as Inflation Trends Diverge
Markets assign an 80% probability of a 25bps hike at the July RBNZ meeting, lifting the OCR to 2.50%. Despite Q1 inflation holding at 3.1%, the Bank's own projections suggest a September hike. However, Westpac expects a hold, citing limited hard data and energy price declines post-US-Iran MOU. The decision will hinge on forward guidance and the Bank's assessment of external shocks.
OPEC+ Meeting to Address Supply Cuts Amid Geopolitical Uncertainty
OPEC+ is set to approve a 188K BPD output increase for August, aligning with prior hikes. Crude prices have retreated to pre-war levels following the US-Iran MOU and Strait of Hormuz reopening, but weaker Chinese imports and rising non-Middle East exports add downward pressure. Iraq's push for quota reassessment adds political complexity.
ECB Minutes Offer Limited Clarity on Rate Path
The ECB's June minutes are expected to reflect a cautious approach post-25bps hike. President Lagarde's Sintra comments and energy price declines have shifted focus to September, with markets pricing out a July move. The minutes may shed light on internal debates but are likely to lack fresh insights amid evolving geopolitical dynamics.
Global Inflation Trends and Risk Sentiment
Swedish CPIF and Norwegian CPI data will test the Riksbank and Norges Bank's tightening resolve. Energy price declines post-MOU offer relief, but currency pressures and domestic demand risks persist. Chinese inflation data will signal factory gate pressures, with PPI accelerating to 3.9% in May. Canadian jobs data will gauge labor market volatility, influencing BoC rate expectations.
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