Markets started the week unusually subdued as even the previous week’s high US CPI print failed to see investors excited. Some analysts wonder if the summer lull has come early and very narrow ranges over the last couple of weeks lend strength to that view. The key meeting of the week was the Federal Reserve meeting and that resulted in a good dose of volatility coming back into the markets as the USD soared. The Fed’s meeting was a clear hawkish shift and this opens up dollar strength in the near term and expectations of Fed bond tapering at their next rate meeting on July 28.

Other key events from the past week

  • USD: Interest Rate Meeting, June 16: This hawkish meeting saw the Fed’s dot plot signal an early rate hike in 2023. As long as real yields keep tracking higher this opens up a near term sell bias in gold and a USDJPY buy bias.
  • CAD: Inflation data, June 16: The CPI print was+ 3.6% vs +3.5% y/y. Furniture prices rose +9.8% the highest since 1982. The question is if the BoC consider this transitory or whether interest rate hikes are needed going forward?
  • Bitcoin: Twitter & Elon Musk, June 13: Bitcoin found support as Elon tweeted, ‘When there’s confirmation of reasonable (~50 percent) clean energy usage by miners with the positive future trend, Tesla will resume allowing Bitcoin transactions’.

Key events for the coming week

  • GBP: Interest Rate meeting, June 24: The latest UK CPI print came in hot at 2% y/y vs 1.5% y/y expected. The UK housing market is also soaring higher, so is this the time the BoE tapers bond purchases and lifts the GBP? However, if the Fed stays on hold and is more dovish then expect gold strength.
  • Oil: OPEC, June 24: US oil has been moving higher on rising oil demand hopes for the second half of this year. Will OPEC once again support the oil markets with the way they cleverly set their production levels?

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