Makro

Beth Hammack, President of the Federal Reserve (Fed) Bank of Cleveland, in an interview on a public radio station on Thursday. She claimed that she sees a lot of uncertainty in the economic outlook and that the Fed should be more neutral in its policy stance given this uncertainty.

Nomura's research analysts note that the the central bank of Sweden, Riksbank kept its policy rate at 1.75% in May, maintaining a wait-and-see stance as weak inflation offsets upside risks from global energy prices and the Iran war.

Commerzbank analysts Michael Pfister and Norman Liebke argue that the Mexican Peso (MXN) is likely to weaken against the US Dollar (USD) in coming weeks as Banxico maintains a dovish stance despite rising inflation risks.

BNY’s Geoff Yu notes that expectations of progress toward peace in Iran are driving a bond rally and shaping flows in the United States (US) Treasury market. As Oil prices fall and real rates reprice, he argues exporter surpluses and reserve management trends could again favor the US Dollar (USD).

Nomura's research analysts report that the central bank of Norway, Norges Bank unexpectedly raised its policy rate by 25bp to 4.25% in May, citing frustration with sticky underlying inflation and a need to preserve credibility after earlier guidance.

TD Securities strategist Bart Melek argues that Gold’s recent decline reflects the Iran-driven Oil shock, higher inflation expectations and a firmer US Dollar, which are keeping Fed policy tighter for longer.

Brown Brothers Harriman’s (BBH) Elias Haddad notes that the Dollar has given back all its war-related gains, with recent weakness seen as overdone.

Boston Federal Reserve (Fed) Bank President Susan Collins said during the late European trading session on Thursday that she sees the central bank holding interest rates at their current levels for longer. Collins added that she expects interest rate cuts to be the baseline scenario going ahead.

Societe Generale analysts highlight that the Czech National Bank (CNB) is expected to keep its policy rate at 3.50% despite a rise in headline inflation to 2.5% year-on-year in April. Governor Michl has emphasized maintaining positive real rates to support savings.

USD/JPY trades around 156.30 on Thursday at the time of writing, down a modest 0.05% on the day, as the Japanese Yen (JPY) remains supported by speculation that Japanese authorities could step into the market to curb the currency’s weakness.

TD Securities strategists Izidor Flajsman and Prashant Newnaha argue that Australia is entering a rare phase of unilateral RBA tightening, with the Fed expected to cut while the RBA continues hiking.

The Australian Dollar (AUD) trades higher against its major currency peers, except the New Zealand Dollar (NZD), during the European trading session on Thursday.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its losses for the second successive day, trading around 97.90 during the European hours on Thursday.