This week, there are several key events that investors should watch closely:
1. SNB Interest Rate Decision: The Swiss National Bank (SNB) is scheduled to announce its interest rate decision. After the surprise rate hikes by the Reserve Bank of Australia (RBA) and the Bank of Canada (BOC) last week, there is speculation that the SNB might also follow suit.
2. UK Inflation Report and BOE Meeting: The UK will release its inflation report, which is expected to show a slowdown in inflation. The Bank of England (BOE) is also scheduled to hold its meeting, and there are expectations of a quarter-point interest rate increase to a 15-year high of 4.75%.
3. Flash PMIs: Flash Purchasing Managers' Index (PMI) data from major economies, including the United States, Eurozone, and Japan, will provide insights into the health of the manufacturing and services sectors. These indicators are closely watched as they provide early signals of economic activity.
4. China LPR: The Loan Prime Rate (LPR) announcement from China will give an indication of the country's monetary policy stance and its efforts to support economic growth.
5. Central Bank Minutes: The minutes from the RBA, BOC, and Bank of Japan (BOJ) meetings will be released, providing additional insights into the discussions and considerations behind their recent policy decisions.
Asian shares started the week cautiously after a strong performance last week. Investors are awaiting the SNB's interest rate decision and Federal Reserve Chair Jerome Powell's testimonies for guidance on future monetary policy decisions. S&P 500 and Nasdaq futures were mostly flat, and U.S. Treasuries were untraded due to the Juneteenth holiday.
U.S. Secretary of State Antony Blinken's visit to China is closely monitored for signs of positive developments between the two largest economies.
Powell's congressional testimonies on Wednesday and Thursday are highly anticipated, as investors look for clues regarding the Fed's stance on interest rates. Some officials have already expressed hawkish views, and markets are pricing in a 70% probability of a quarter-point rate hike in July.
The Bank of England is expected to raise interest rates by a quarter point on Thursday, with market expectations of further rate increases throughout the year.
The dollar index remained stable, while the yen weakened due to a dovish BOJ and the euro held near a five-week high after the European Central Bank's recent rate hike.
Oil prices declined on Monday due to profit-taking after strong gains last week. Market focus remains on China's potential interest rate cuts and Powell's upcoming testimony.
Gold prices were relatively unchanged as markets awaited more information on monetary policy from Fed speakers. Copper prices retreated as investors booked profits.
The UK bond market faces a crucial period, with inflation data and the BOE decision influencing market sentiment. Yields have reached their highest level since 2008, attracting some asset managers who believe the market is pricing in more rate hikes than the BOE is likely to deliver.
That's all for the morning update for the trading week ahead. Stay tuned for further developments in the markets.