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Emerging market central banks are leading a wave of interest-rate hikes as the war in Iran reignites inflation, moving faster than most of their developed peers
At least 10 emerging market central banks have raised rates since fighting began in late February $Dxy
๐บ๐ธ The US is proposing new tariffs of at least 10% on imports from 60 trading partners
A 10% rate would apply to imports from Canada, Mexico, the European Union, Taiwan and the UK, while products from other major economies would be subject to a 12.5% levy $Dxy
๐ฏ๐ต Traders are on watch for another round of Yen intervention after the $UsdJpy pair once again hit the critical 160 "line in the sand" between 8:30 and 9:00 a.m. Japanese local time
๐ฆ๐บ Australiaโs economy decelerated last quarter, with GDP increasing 0.3% in the first three months of the year
Despite business spending helping to boost the economy in Q1, there is growing concern around the possibility of a quarterly contraction in the second quarter of 2026 $AudUsd
๐บ๐ธ US ISM Manufacturing PMI
54.0 vs. 53.1 expected
This is the highest print in over 4 years with the report now signalling expansion for five straight months $Dxy
๐ฌ๐ง UK house prices fell at the fastest pace for almost a year due to a surge in borrowing costs triggered by the Iran war
The average price of a home dropped 0.6% to ยฃ278,024, with prices up 1.7% on an annual basis, and the average two-year fixed-rate mortgage at 5.68% $GbpUsd
๐จ๐ญ Switzerlandโs economy grew 0.4% from the previous three months, below the 0.5% previously reported
Economists expect Switzerland to continue growing in the current quarter and in the rest of 2026, with inflation accelerating but staying within the central bankโs target range $UsdChf
๐ช๐บ Euro-area consumersโ 3 year inflation expectations fell slightly in April
The ECB are widely expected to raise rates next week as expectations for the next 12 months remained unchanged at 4%, while the outlook for five years held at 2.4%, above the ECBโs 2% medium-term inflation target $EurUsd
๐จ๐ฆ Canada's current account deficit has surged to C$7.2 billion from C$1 billion a quarter ago
The rapid widening was driven by a surge in import prices as well as a 31% YoY drop in foreign direct investment
$UsdCad
๐ธ๐ช Swedenโs economy has contracted for the first time in a year
The center-right government plans a package of tax cuts and other stimulus measures to help the recovery ahead of parliamentary elections in September $UsdSek
Financial markets are now pricing ~30 basis points of Fed hikes by March 2027 compared with:
~60 basis points for the ECB
~40 basis points for the Bank of England
~40 basis points of BOJ rate increases by year-end
$Dxy $EurUsd $GbpUsd $UsdJpy
๐ช๐บ Inflation in France and Spain has accelerated to the fastest level since 2024, putting more pressure on the ECB to hike rates
CPI rose 2.8% YoY in May in France and by 3.6% in Spain, driven primarily by a war-induced surge in energy costs $EurUsd
๐บ๐ธ๐ฎ๐ท US and Iran agree a ceasefire extension for 60 days and a memorandum of understanding that shipping through the vital Strait of Hormuz will be โunrestricted"
Iran has been given 30 days to remove all mines from the Strait $Wti $Dxy
๐ฏ๐ต Traders now see ~75% chance that the BOJ will hike rates in June and ~92% they will hike by July, according to the latest swap market prices $UsdJpy
๐ณ๐ฟ New Zealand Annual Budget
The New Zealand government face a deeper budget deficit and weaker growth this year with a deficit of $11.9 billion (NZ Dollars) in the 12 months through June 2026
A surplus is now projected in 2029, earlier than previous forecasts of 2030 $NzdUsd
๐ฟ๐ฆ South Africaโs central bank is set to raise interest rates for the first time in three years,with traders pricing in a 25bps increase
The move is expected to come as the SARB seeks to combat inflationary pressures stemming from the Iran war $UsdZar
๐บ๐ธ๐ฎ๐ท The $Dxy is trading higher today after the US renewed strikes on Iran following a stalemate in current peace negotiations
$Wti also rallied over 3% on the news of continued hostilities in the Persian Gulf