MARKET ANALYSIS

📊Week Ahead: U.S. CPI & Warsh Testimony Take Center Stage; BoC Policy Divergence in Focus Global markets enter one of the most important macro weeks of the quarter. More than a month into Kevin Warsh’s tenure as Federal Reserve Chair, investors continue assessing the long-term direction of U.S. monetary policy. This week’s combination of U.S. inflation data, Warsh’s testimony before Congress, renewed Middle East tensions, and the start of Q2 earnings season is set to shape cross-asset sentiment. 1️⃣🇺🇸United States (USD): CPI & Kevin Warsh Under the Spotlight 🏛 Congressional Testimony (Tuesday–Wednesday) Fed Chair Kevin Warsh will testify before both the House and Senate. While explicit forward guidance remains unlikely, lawmakers are expected to question the Fed’s communication strategy, balance-sheet policy, and assessment of incoming economic data. 📈 CPI Before the Testimony (Tuesday) June CPI will be released just 90 minutes before Warsh begins speaking, making it the week’s key macro event. Consensus Forecasts: • Headline CPI: 3.9% YoY (vs. 4.2%) • Core CPI: 2.9% YoY Although inflation has eased, both headline CPI and Core PCE remain above the Fed’s target, keeping restrictive policy in focus. 💵 Dollar Outlook 📈 Bullish: Higher-than-expected CPI combined with a hawkish Warsh or refusal to rule out further tightening would support the Dollar. 📉 Bearish: Softer inflation or a more balanced tone acknowledging improving inflation could pressure the Greenback. 📅 Additional U.S. Data • Wednesday: PPI, Empire State Manufacturing Index • Thursday: Retail Sales, Philadelphia Fed Index • Friday: Industrial Production, Preliminary Michigan Consumer Sentiment 2️⃣Geopolitics & 📊 Q2 Earnings Season 🛢 Middle East Risks Return Renewed tensions have revived concerns over shipping through the Strait of Hormuz. Any disruption could lift oil prices, strengthen safe-haven demand for the U.S. Dollar, and reinforce inflation concerns. 📊 Earnings Season Begins Key reports include: • Major U.S. banks • Netflix • ASML Holding • TSMC Markets will closely watch AI-related capital spending and semiconductor demand for clues about the sustainability of the AI investment cycle. 3️⃣🇨🇳China (CNY) & 🇦🇺🇳🇿Commodity Currencies 🇨🇳 Q2 GDP (Wednesday) China’s economy continues to soften amid weaker domestic demand and ongoing property-sector challenges. Consensus: • Q2 GDP: 4.4% YoY (Prev. 5.0%) • Quarterly Growth: 0.9% QoQ Tuesday’s trade data will also provide an important update on exports. 🇦🇺AUD & 🇳🇿NZD Outlook A weaker-than-expected GDP report would likely pressure commodity currencies and weigh on overall risk sentiment. 4️⃣🇨🇦Canada (CAD): BoC Policy Divergence 🇨🇦 Bank of Canada (Wednesday) Markets expect the BoC to leave rates unchanged. Governor Tiff Macklem continues to highlight slowing growth despite relatively stable inflation. With only limited tightening priced in, policy divergence between the BoC and a more hawkish Federal Reserve continues to favor USD/CAD. 5️⃣🇬🇧United Kingdom (GBP) 📊 Monthly GDP (Thursday) Following April’s 0.1% contraction, investors will watch May GDP for signs of stabilization or continued weakness. Political attention also remains on the expected Labour Party leadership transition, leaving Sterling sensitive to political headlines. 6️⃣🇪🇺Eurozone (EUR) & 🇯🇵Japan (JPY) 🇪🇺Eurozone Friday’s final June CPI revision is the region’s main event, though its market impact is expected to remain secondary to U.S. developments. 🇯🇵Japanese Yen USD/JPY continues to trade near multi-decade highs as rate differentials favor the Dollar. With the pair approaching 163.00, intervention risks from Japan’s Ministry of Finance remain elevated.