US inflation runs hot but investors believe the Fed will stay on hold

The week started quietly ahead of the Bank of Canada’s and the European Central Bank’s interest rate meetings midweek. See below for more details on those. Equity markets remained supported and, as long as the Federal Reserve doesn’t signal earlier interest rate hikes next week, the Fed’s accommodative policy should keep dip buyers interested. However, investors need to be aware that the S&P500, the Dow, the Nasdaq, and the DAX are all trading around record highs. Therefore, keep on top of risk and don’t over-leverage in these types of extended markets.

Other key events from the past week

CAD: Interest Rate Meeting, June 09: The BoC’s meeting saw no change this week as expected and the BoC were keen to have a ‘holding’ week. The USDCAD pair was mildly supported out of the meeting, but the pair looks vulnerable to a retracement higher, especially on any reasons for USD strength.

EUR: Interest Rate Meeting, June 10: The ECB also kept a ‘steady hand’ this month. The General Council are more optimistic about the outlook than 3 months ago and they see a strong rebound from Q2. However, will this lift the euro?

Bitcoin: Will $30,000 hold? Bitcoin’s key level is the $30,000 support zone on the weekly chart. If it holds then a retest of $40,000 looks more likely than a fall down to $20,000. However, as always, be prepared for Bitcoin volatility!

Key events for the coming week

USD: Interest Rate meeting, June 16: There is one fundamental question in the market’s mind. Will the Fed taper? Any hint of tapering from the FOMC this week and expect USD strength. However, if the Fed stay on hold and are more dovish then expect gold strength.

AUD: Key employment data, June 17: Investors will be watching the unemployment rate very carefully next week. If unemployment drops below 5% that should provide strong support for the AUD.

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