Weekly Outlook & News by zForex

[zForex]

Weekly Outlook (1-5 June)​

This week, markets focused on the Federal Reserve handover. Jerome Powell used his final days as Chair to defend Fed independence, while Kevin Warsh now takes the lead with inflation still above target and the June 17 FOMC meeting approaching.

The latest PCE report gave mixed signals. Core PCE rose only 0.2% monthly, but annual inflation remains well above the Fed’s target. Growth is slower, yet the labor market and consumer spending remain resilient, leaving Warsh with a difficult first policy test.

Artificial intelligence also stayed in focus. Anthropic, SpaceX, and OpenAI are preparing for major public listings, while South Korea became the world’s sixth-largest stock market as Samsung and SK hynix benefited from strong AI chip demand.

On the technical side, gold is testing the $4,480 to $4,500 support zone, while silver remains near $75. Brent is holding around $95, with $100 back in view if supply-route concerns increase. DXY remains above 99 as markets await fresh US labor data.

Week Ahead​

Looking ahead, US jobs data, JOLTS, ADP employment, and ISM surveys will guide Fed expectations. Europe will watch inflation before the ECB meeting, while Asia-Pacific markets focus on China PMIs, Japan data, India GDP, and Australia’s first-quarter growth.

 

[zForex]

House Restricts Iran War Powers​

The Republican-led House voted 215–208 to limit administration military operations against Iran, marking a rare break from President Donald Trump on foreign policy. While the measure requires Senate approval, it underscores mounting bipartisan opposition to the conflict.

Lawmakers raised alarms over soaring economic costs, rising energy prices, and systemic inflation.

Ongoing friction and disruptions in the Strait of Hormuz have pushed U.S. gasoline prices up to $4.26 per gallon, squeezing consumers, while polls indicate 64% of Americans view the conflict as a mistake.

Four Republicans joined Democrats to pass the resolution, arguing that protracted military action without explicit congressional authorization directly violates the War Powers Act.

 

[zForex]

Strong US Data Backs Rate Hike Bets (08-12 June)​

Global markets started the week as investors reassessed interest rate expectations following a series of stronger US economic releases. Solid labor market data, rising job openings, and resilient employment figures strengthened the case for tighter monetary policy, lifting the US dollar and bond yields.

At the same time, renewed tensions in the Middle East, including missile exchanges between Iran and Israel and ongoing disruptions near the Strait of Hormuz, kept energy markets on edge and maintained concerns about inflationary pressures.

The macro backdrop remains dominated by the interaction between economic resilience and inflation risks. While labor market indicators continue to point to a healthy US economy, rising oil prices linked to geopolitical tensions are adding pressure to consumer prices globally. Markets now increasingly expect the Federal Reserve to deliver another rate hike before year-end, while the European Central Bank and Bank of England are also expected to continue tightening policy in response to persistent inflation.

Market Drivers & Catalysts​

• Strong US Labor Market: US payrolls exceeded expectations, while unemployment remained unchanged at 4.3%, reinforcing the case for tighter Federal Reserve policy.
• Middle East Tensions: Missile exchanges between Iran and Israel and continued disruptions around the Strait of Hormuz heightened concerns over global energy supplies.
• Rising Rate Hike Expectations: Markets now fully price in a Federal Reserve rate hike by year-end, while investors also anticipate further tightening from the ECB and BoE.
• Oil Supply Risks: Despite OPEC+ agreeing to increase production quotas, geopolitical risks continue to support elevated crude prices and inflation concerns.
• Eurozone Inflation Pressures: Inflation accelerated to 3.2%, its highest level since 2023, increasing expectations for ECB action.

Fixed Income​

• US 10-Year Treasury Note Yield: Rose to approximately 4.57%, reaching a two-week high after stronger labor market data increased expectations of a Federal Reserve rate hike. Payroll gains of 172,000 in May exceeded forecasts, while unemployment remained at 4.3%. Rising oil prices and geopolitical tensions also contributed to inflation concerns.
• UK 10-Year Bond Yield: Remained below 4.9% as easing oil prices and cautious investor sentiment limited upward pressure. Markets continue to price nearly two Bank of England rate hikes this year despite mixed domestic economic signals and ongoing political uncertainty.
• Japan 10-Year Government Bond Yield: Climbed to around 2.7%, reaching a one-week high. Strong US labor data pushed global yields higher, while rising oil prices and expectations of a Bank of Japan rate increase added support.
• Germany 10-Year Bund Yield: Rose to 3.04% as investors priced in both stronger US growth and a high probability of an ECB rate hike next week. However, weaker Eurozone growth data limited further upside.

Commodities​

Gold traded around $4,300 per ounce after falling nearly 5% last week to its lowest level in two months. Strong US labor market data increased expectations of tighter Federal Reserve policy, weighing on bullion. However, ongoing Middle East tensions and concerns over energy supply disruptions continued to provide some support.

Silver held near $68 per ounce after dropping almost 10% last week to a two-month low. Higher US interest rate expectations pressured precious metals, though inflation concerns linked to energy markets helped limit further declines.

Currencies​

• U.S. Dollar Index (DXY): Traded near 100 after gaining more than 1% during the previous week. Stronger employment data and rising expectations for a Federal Reserve rate hike supported the dollar.
• Euro: Fell below $1.16, reaching its weakest level since early April. Strong US economic data raised demand for the dollar, while investors balanced expectations of an ECB rate hike against concerns over the Eurozone’s first-quarter economic contraction.
• British Pound: Dropped below $1.34, its lowest level since mid-May. Strong US data strengthened the dollar, while domestic political uncertainty weighed on sentiment. Markets still expect nearly two Bank of England rate hikes this year, with the first potentially arriving in September.
• Japanese Yen: Weakened beyond 160 per dollar, increasing speculation about possible intervention by Japanese authorities. Strong US data, higher oil prices, and expectations of future Fed tightening continued to pressure the currency.

Economic Data Highlights​

• US Unemployment Rate (May): Held steady at 4.3%, in line with expectations. Employment increased by 149,000, while labor force participation remained unchanged at 61.8%. The broader U-6 unemployment rate eased to 8.1%.
• US Job Openings (April): Increased by 731,000 to 7.618 million, the highest level since late 2024 and well above expectations. Professional and business services led gains, while finance and insurance saw declines.
• Eurozone Inflation Rate (May): Rose to 3.2%, the highest level since 2023 and significantly above the ECB’s 2% target. Higher energy prices were the primary driver, while core inflation also edged higher.
• China Manufacturing PMI (May): Slowed to 51.8 from April’s multi-year high but remained above expectations, indicating continued expansion. New orders and output growth moderated, export demand softened, and employment edged lower, though business sentiment remained positive.

Macro Calendar Highlights​

• Federal Reserve Outlook: Markets will continue assessing the likelihood of a rate hike later this year following stronger payrolls, rising job openings, and resilient labor market conditions.
• European Central Bank Meeting: Investors are closely watching next week's ECB meeting, where a rate increase is widely expected following the rise in Eurozone inflation to 3.2%.
• Middle East Developments: Ongoing tensions between Iran and Israel, along with disruptions near the Strait of Hormuz, remain key drivers for oil prices and inflation expectations.
• Central Bank Expectations: Markets continue to price further tightening from the Bank of England and Bank of Japan as inflation pressures persist and labor markets remain resilient.

 

[zForex]

Peace Deal De-Escalates Energy Risk (15 - 19 June, 2026)​

Global markets experienced a strong wave of risk-on sentiment this week following reports of an interim agreement between the US and Iran to halt their military conflict and reopen the Strait of Hormuz, where nearly 600 vessels are currently stranded. The peace deal, scheduled to be signed in Switzerland on Friday, establishes a 60-day window for talks regarding Iran’s nuclear program, offering immediate maritime ceasefire terms and partial sanctions relief on Iranian overseas oil sales.

The de-escalation pushed Brent crude down sharply to $83.50/bbl, reducing energy-driven inflation fears worldwide. In tandem, US macroeconomic sentiment improved noticeably as consumer confidence bounced back, allowing sovereign bond yields to recede from recent highs and giving precious metals room to recover.

Market Drivers & Catalysts​

• The Swiss Interim Accord: The upcoming Friday signing provides a 60-day diplomatic runway. While broader financial incentives remain unclear, the immediate reopening of the Strait of Hormuz is dismantling the war's acute supply premium.
• Easing US Inflation Expectations: The University of Michigan Consumer Sentiment Index jumped to 48.9 in June (vs 46.0 expected). Crucially, 1-year inflation expectations dropped to 4.6%, while the 5-year outlook fell to 3.4%.
• Unblocking Global Supply: With near 600 ships waiting to exit the Persian Gulf, oil prices dipped significantly, though they remain roughly $13 above pre-war benchmarks as inventories await rebuilding.
• The Warsh Era Begins: Markets are braced for the first Federal Reserve policy meeting under newly appointed Chair Kevin Warsh. While rates are expected to hold steady, traders are looking for any hawkish signs of a late-2026 hike.
• BOJ's Critical Threshold: Japan's 10-year bond yield hit 2.56% during the week as markets fully price in a 25 basis point rate hike at the upcoming meeting, which would lift the policy rate to 1.00%, its highest since 1995.

Fixed Income​

• US 2-Year Treasury Yield: Settled under 4.03%, dropping roughly 5 basis points on Monday alone as fading oil risks drove buyers back into short-duration paper, bringing the key 4.00% psychological level into view.
• US 10-Year Treasury Yield: Slipped below 4.43%, losing 5 basis points over the week. Softening energy benchmarks directly lowered the market's long-term inflation projections and aggressive Fed tightening bets.
• Japan 2-Year JGB Yield: Fell 1.5 basis points to slide below 1.40%. The reduction in crude prices temporarily softened near-term domestic inflation pressure ahead of the central bank's rate decision.
• Japan 10-Year JGB Yield: Shook off an intraday drop to 2.56% to stabilize near 2.58%. The market remains firmly positioned for a monetary tightening cycle to help defend the yen.

Commodities​

Gold staged a notable recovery following last week's aggressive liquidation. Lower oil prices helped cool global rate-hike anxieties, pushing the metal toward its primary technical barrier: the 200-day moving average near $4,450/oz.

Silver and other hard assets rallied alongside gold. The stabilization of energy inputs renewed investor interest in non-yielding tangible assets under a less aggressive global central bank outlook.

Currencies​

• U.S. Dollar Index (DXY): Weakened across the board. The reduction in geopolitical hostilities dented safe-haven demand for the dollar, shifting capital toward pro-growth currencies.
• Euro: Rebounded back above the key 1.1575–1.1600 technical resistance zone to trade near 1.1620 during early European trading hours, indicating renewed upside momentum.
• Australian Dollar: Climbed past 0.7085, engineering a full recovery from the previous Friday's depressed close below the 0.7050 mark, fueled by surging global risk appetite.
• Japanese Yen: Briefly strengthened below 160.00 per dollar before hovering just above that boundary. Traders are reluctant to chase the currency too far ahead of the historic BOJ meeting.

Economic Data Highlights​

• US Consumer Sentiment (June): Printed at 48.9, a clear improvement from May’s 44.8 reading, signaling that households are responding positively to the cooling energy crisis.
• US 1-Year Inflation Expectations: Declined to 4.6%, easing immediate pressure on the Federal Reserve to signal additional interest rate hikes this summer.
• US 5-Year Inflation Expectations: Dropped to 3.4%, demonstrating that long-run consumer price expectations are beginning to re-anchor as shipping corridors reopen.
• BOJ Policy Rate Target: Priced heavily for a move to 1.00% from the current 0.75%, a level unseen for over three decades, to curb imported energy distortions.

Macro Calendar Highlights​

• Federal Reserve Policy Meeting & Press Conference (Chair Kevin Warsh)
• Bank of Japan (BOJ) Interest Rate Decision
• Bank of England (BoE) Monetary Policy Announcement & UK CPI
• China Monthly Macro Portfolio (Industrial Production, Retail Sales, Investment)
• US Retail Sales, Industrial Production, and Housing Starts (May)

 

[zForex]

Fed and Iran Uncertainty Keep Markets on Edge (22-26 June)​

Global financial markets faced a turbulent cross-current this week as sharp shifts in the US–Iran diplomatic track collided with hawkish monetary policy signals.




The temporary optimism from the prior week dissolved as scheduled peace talks were abruptly canceled, sparking fresh uncertainty over a durable Middle East ceasefire. Donald Trump issued warnings of potential military strikes if Hezbollah attacks persist, while also cautioning Iran regarding the Strait of Hormuz.

Despite reports of suspended talks, conflicting signals emerged as mediators from Qatar and Pakistan indicated both sides had agreed on a 60-day roadmap toward a final deal. In the macro sphere, the Federal Reserve’s hawkish pause under new Chair Kevin Warsh dominated sentiment. Policymakers sharply raised inflation estimates due to ongoing Middle East tensions, driving the US Dollar Index to its highest level since May 2025 and cementing a broad sell-off across precious metals and regional currencies.

Market Drivers & Catalysts​

• Diplomatic Whiplash: Sentiment fractured after formal US–Iran peace talks were canceled, though separate updates from Qatari and Pakistani mediators suggested that a 60-day roadmap remained on the table.
• The Warsh Fed’s Hawkish Stance: The Federal Reserve held the funds rate at 3.50%–3.75%, but policymakers aggressively raised inflation forecasts, with nearly half of the officials now anticipating a rate hike in 2026.
• Yen Beyond Historic Lows: The Japanese yen collapsed past 161 per dollar, completely erasing all gains from the April 30 support action. Widening policy divergence remains a structural drag despite the BOJ’s historic tightening.
• European Yield Pressures: German Bund yields moved higher as ECB officials adopted an aggressive tone. Joachim Wunsch hinted at another interest rate hike, while Philip Lane asserted that the Eurozone economy can absorb higher borrowing costs.
• China's Industrial Rebound: May macro data revealed that China's industrial production accelerated to 4.5% year-on-year, beating the 4.3% forecast, led by sustained expansion across the automotive, electronics, and machinery sectors.

Fixed Income​

• US 10-Year Treasury Note Yield: Slipped slightly to 4.44% as markets calibrated the latest economic projections. Fixed income markets are now heavily pricing an interest rate hike for October, while the shorter-term 2-year yield edged up to 4.20% before a Friday holiday closure.
• UK 10-Year Bond Yield: Rebounded to around 4.8%. The upward move reflected political uncertainty following Andy Burnham’s by-election victory, fueling market speculation regarding a leadership challenge to Prime Minister Keir Starmer.
• Japan 10-Year Government Bond Yield: Climbed to 2.64%. Yields trended upward after Deputy Governor Ryozo Himino pointed to robust corporate earnings and rising incomes supporting steady tightening.
• Germany 10-Year Bund Yield: Rose to 2.95%. Sovereign debt faced selling pressure as regional energy markets steadied and policymakers signaled readiness for further monetary tightening.

Commodities​

Gold plunged below $4,150/oz. The precious metal extended its downward trajectory, heavily pressured by the prospect of higher interest rates and elevated consumer price expectations.

Silver declined toward $64/oz during Monday's trading session. Industrial and investor demand was stifled by tighter monetary expectations and renewed tensions surrounding the initial stages of the US–Iran negotiations.

Currencies​

• U.S. Dollar Index (DXY): Rose to approximately 101. The US Dollar capitalized on its safe-haven appeal and the updated Fed dot plot, which revealed deeply divided views regarding the necessity of a 2026 rate hike.
• Euro: Slumped to near $1.145, recording a weekly loss of roughly 1%. The single currency hit its lowest level since mid-March as the broader dollar rally overmatched hawkish baseline statements from the ECB.
• British Pound: Retreated to settle just above $1.32, suffering a weekly drop exceeding 1%. Strong UK retail data failed to insulate sterling against political uncertainty and a broader migration away from risk assets.
• Japanese Yen: Weakened beyond 161 per dollar to approach its lowest levels since 1986. Fresh warnings from Japanese officials regarding potential direct market intervention failed to halt the decline.

Economic Data Highlights​

• US Interest Rate Decision: Held at 3.50%–3.75% for a fourth consecutive meeting. Growth forecasts were trimmed, while inflation projections were adjusted upward due to persistent geopolitical friction.
• Bank of Japan Policy Rate: Raised by 25 basis points to 1.0% in an 8–1 vote, marking the highest level for the benchmark rate since 1995 as the central bank moves defensively against energy-driven risks.
• China Industrial Production: Expanded 4.5% YoY in May (up from 4.1% in April). Total industrial output for the first five months of 2026 grew at a 5.4% pace, accompanied by a 0.4% month-over-month gain.
• Japan Inflation Rate (May): Rose to 1.5% annually, up from 1.4% in April, as energy subsidy expirations took effect. Food inflation moderated to an 18-month low of 3.5%, while core inflation held steady at 1.4%.

Macro Calendar Highlights​

• US Core PCE Inflation Report (May)
• Eurozone Flash Consumer Price Index Estimate
• China Official Manufacturing and Services PMI
• Japan Retail Sales and Tokyo CPI Preview
• Developments on the 60-Day Qatar-Pakistan Diplomatic Roadmap

 

[zForex]

Fed Hike Bets Rise Ahead of Jobs Data (29 June – 3 July)​

Global markets entered the week with investors focused on the upcoming US labor market report, which is expected to provide the next major signal for Federal Reserve policy. The US dollar remained near its highest level in more than a year after last week’s strong rally, supported by hawkish comments from Fed Chair Kevin Warsh and growing expectations of further monetary tightening.



At the same time, renewed military clashes between the United States and Iran in the Strait of Hormuz briefly reignited inflation concerns before both sides agreed to suspend military action ahead of another round of peace talks in Doha.

The macro backdrop remains driven by the balance between resilient economic activity and persistent inflation risks. Traders now expect three Federal Reserve rate hikes this year, with the probability of the first increase in September exceeding 60%. While the ECB recently delivered a 25 basis point rate hike and the Bank of Japan continues to signal further policy normalization, geopolitical developments and energy prices remain key variables for inflation expectations across global markets.

Market Drivers & Catalysts​

• Fed Rate Expectations: Hawkish comments from Fed Chair Kevin Warsh reinforced expectations for tighter monetary policy. Markets now anticipate three Federal Reserve rate hikes this year, with the probability of the first move in September exceeding 60%.
• US Jobs Report in Focus: Investors are waiting for this week’s employment data to assess the strength of the labor market and the Fed’s next policy steps.
• Middle East Developments: Fresh clashes between the US and Iran around the Strait of Hormuz temporarily lifted oil prices before both countries agreed to halt military operations ahead of peace negotiations in Doha.
• Inflation Concerns Persist: Higher oil prices continue to support inflation risks despite improving diplomatic prospects.
• Global Central Banks: The ECB raised interest rates by 25 basis points this month, while the Bank of Japan continues to signal additional tightening following stronger domestic economic data.

Fixed Income​

• US 10-Year Treasury Note Yield: Held near 4.38% after last week’s decline as investors awaited the June employment report. Treasury markets remain focused on labor market conditions and their implications for future Federal Reserve policy.
• UK 10-Year Bond Yield: Rose to 4.7379%, gaining 3 basis points on the day. The yield remains 11.8 basis points below last month’s level but stands 22.6 basis points higher than a year ago, reflecting the sharp increase since March 2026.
• Japan 10-Year Government Bond Yield: Increased to approximately 2.65%, ending a three-session losing streak. Strong May retail sales, which rose 5.3% year-on-year and marked the fastest growth since November 2023, reinforced expectations for further Bank of Japan tightening.
• Germany 10-Year Bund Yield: While no major move was reported this week, markets continue to monitor the ECB’s tightening cycle following this month’s 25 basis point rate increase and guidance that inflation remains on track to return to target over the medium term.

Commodities​

Gold slipped to around $4,050 per ounce, ending a two-session rally as renewed fighting between the United States and Iran pushed oil prices higher and revived inflation concerns. Iran struck a container vessel, a ship carrying Qatari oil, and military facilities in Kuwait and Bahrain before both sides agreed to suspend military operations ahead of peace negotiations scheduled for this week in Doha.

Silver declined to approximately $58.5 per ounce, ending a two-session recovery. Renewed hostilities in the Strait of Hormuz pushed oil prices higher, increasing inflation concerns and weighing on precious metals.

Currencies​

• U.S. Dollar Index (DXY): Traded near 101.3 after last week’s rally to its highest level in more than a year. Investors remain focused on this week’s US employment report, while markets increasingly expect three Federal Reserve rate hikes this year.
• Euro: Slipped below $1.14, trading near its weakest level since June 2025. A stronger US dollar continued to pressure the single currency despite the ECB’s recent 25-basis-point rate increase. President Christine Lagarde maintained that inflation remains on track to return to target and rejected the need for more aggressive tightening.
• British Pound: Rose marginally to 1.3203 on June 29, gaining 0.04% on the day. However, sterling remains down 1.87% over the past month and 3.85% over the past year. For historical comparison, the pound reached an all-time high of 2.86 in December 1957.
• Japanese Yen: Held near 161.7 per dollar, remaining close to levels last seen in 1986. Despite strong domestic data, including May retail sales growth of 5.3%, the fastest pace since November 2023, the currency remained under pressure from dollar strength. Markets continue to expect further Bank of Japan rate hikes.

Economic Calendar Highlights​

• UK Q1 GDP (QoQ and YoY)
• US Chicago PMI
• JOLTS Job Openings
• CB Consumer Confidence
• Eurozone Preliminary CPI
• US ADP Nonfarm Employment Change
• S&P Global Manufacturing PMI
• ISM Manufacturing PMI
• ISM Manufacturing Prices
• Crude Oil Inventories
• US Nonfarm Payrolls
• Unemployment Rate
• Average Hourly Earnings
• Initial Jobless Claims
• US Independence Day (July 3)