Two major central bank policy meetings today, at the US Federal Reserve and the Bank of Canada, will be closely watched for detailed forecasts and hints.
- There are two important central bank policy meetings today. The most important, the Federal Reserve, will be meeting later, while the Bank of Canada will be meeting first. Both banks are overwhelmingly expected to make no change to their respective interest rates, but the details in their statements and forecasts which will be released could cause more dovish or hawkish tilts on perceived rate paths and move the USD and/or the CAD accordingly. The Fed is expected to hold rates until December 2027, a more conservative approach driven by the energy shock crisis.
- Australia released CPI (inflation) data a few hours ago which were lower than expected. Annualised inflation was expected to be 4.8% but was a bit lower at 4.6%, while month-on-month it was expected to rise by 1.3% but was only 1.1%. This may be contributing to the minor weakening we are seeing in the Aussie right now.
- Major US equity indices the NASDAQ 100 and the S&P 500 are again moving higher after losing ground yesterday. Analysts tend to see this as driven by optimism over a slew of tech company earnings, which will shortly be announced. Trend traders will already be long of these two indices, as well as other very bullish indices such as the KOSPI Composite Index. US persons can access the KOSPI via the ETF EWY.
- The Strait of Hormuz remains closed by Iran, and Iran remains blockaded by the USA. This has triggered a new move higher in energies such as crude oil and in gasoline futures, with the latter rising firmly yesterday to a new long-term high. If you want to follow trend traders and be long of gasoline, but the futures are too big for you, there is a US ETF ticker UGA which is affordable. I am long of it.
- The Wall Street Journal is reporting that President Trump has told aides to prepare for a long-term blockade of Iran. The blockade seems to be effective and is probably causing Iran something like $400 million per day in lost revenue from oil exports. Preparation does not mean this scenario will necessarily happen - the US military buildup in the region continues and President Trump ponders his next move - whether to continue with the economic blockade, or whether to combine that with new military action. Prediction markets do not forecast a resumption of the war. Polymarket implies combat will be fully over by the end of June, but does not see a negotiated settlement as likely to happen within the same time frame.
- In the commodities market, Wheat futures have broken strongly to new long-term highs, almost a new 2-year high. If Wheat futures are too large for you to trade with this breakout and trend, you could consider a Wheat ETF like WEAT which could be more affordable.
- Bitcoin seems to have found support just above $75,000.
- Gold and Silver - especially Gold - look weak and likely to trade lower today.
- The Forex market was relatively quiet during the Asian session. Again, the strongest major currency since the Tokyo open was the Japanese Yen, while the New Zealand Dollar has been the weakest. The USD/JPY currency pair is trading slightly higher, well above ¥159. Many trend traders will be long of USD/JPY.