MARKET ANALYSIS

📊Week Ahead: ISM Services PMI & FOMC Minutes to Test Fed Rate Expectations The U.S. Dollar ended the week under pressure following a weaker-than-expected Non-Farm Payrolls (NFP) report and a softer ISM Manufacturing PMI. However, the broader macro narrative remains far from dovish. While crude oil has largely returned to pre-conflict levels, the lagged inflationary effects of the Middle East energy shock continue to shape central bank expectations. In the week ahead, investors will focus on key U.S. services data and the FOMC Minutes for fresh guidance on the Federal Reserve’s policy outlook. 1️⃣United States (USD) 🇺🇸 🔹 NFP Weakness vs. Warsh’s Hawkish Stance: June’s softer labor report and the decline in the ISM Manufacturing PMI to 53.3 prompted markets to modestly scale back near-term rate hike expectations. The probability of a July hike has fallen to 18%, although markets continue to fully price a 25-basis-point hike by December. 🔹 The Sintra Message: The Dollar’s downside remained limited after Fed Chair Kevin Warsh reaffirmed at the ECB Sintra Forum that the Federal Reserve will not tolerate inflation remaining above target and emphasized the institution’s independence from political influence. 🔹 ISM Services PMI & FOMC Minutes: Monday’s ISM Services PMI will be closely monitored, as the services sector accounts for roughly 90% of U.S. economic activity. Particular attention will be paid to the Prices Paid component following the elevated manufacturing reading. 🔹 Wednesday’s FOMC Minutes: Investors will look for further insight into the Committee’s inflation outlook and policy debate. With several policymakers already favoring at least one additional rate hike this year, a hawkish tone could lift Treasury yields and the U.S. Dollar while pressuring Gold and richly valued equity sectors. 2️⃣New Zealand (NZD) 🇳🇿 🔹 RBNZ Policy Decision (Wednesday): The Reserve Bank of New Zealand is widely expected to raise the Official Cash Rate by 25 basis points after stronger-than-expected Q1 GDP data. 🔹 Forward Guidance Matters: Since a rate hike is largely priced in, the New Zealand Dollar’s reaction will depend primarily on the Bank’s forward guidance. Any indication of additional tightening later this year would provide further support for the Kiwi. 3️⃣Eurozone (EUR) 🇪🇺 🔹 ECB Meeting Accounts (Thursday): The European Central Bank will publish the minutes from its latest policy meeting, where officials delivered a 25-basis-point rate hike and revised inflation projections higher. 🔹 Rate Path Outlook: Markets currently assign roughly a 30% probability to another rate increase later this month. Evidence of broad support for consecutive hikes would strengthen the Euro by reinforcing expectations of further policy tightening. 4️⃣Canada (CAD) 🇨🇦 🔹 Employment Report (Friday): The Canadian Dollar remains under pressure following weaker oil prices and a cautious Bank of Canada. 🔹 Potential Catalyst: A stronger-than-expected June employment report could trigger a meaningful relief rally in the Loonie by improving expectations for domestic economic resilience. 5️⃣China (CNY) 🇨🇳 🔹 Inflation Data (Thursday): China’s June CPI and PPI releases will provide an important update on domestic demand following the normalization of energy markets and the reopening of shipping through the Strait of Hormuz. 🔹 Global Implications: The data will also offer valuable insight into global manufacturing demand and could influence broader risk sentiment across commodity and Asia-Pacific currencies. ⚠️Trading Advisory: Markets remain caught between softer U.S. macro data and the Federal Reserve’s persistent anti-inflation stance. If Monday’s ISM Services Prices Paid index surprises to the upside or Wednesday’s FOMC Minutes reinforce a broadly hawkish policy outlook, expectations for additional tightening could quickly recover—supporting the U.S. Dollar while increasing pressure on Gold, equities, and other risk-sensitive assets.