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SNB cuts to zero, sees subdued growth as tariff front-loading fades

    By
    ActionForex
    -

    SNB lowered its policy rate by 25 bps to 0.00%, as widely expected. The move came as inflation pressures continue to ease and growth momentum slows following a front-loaded export boost in Q1. SNB noted that its conditional inflation forecast has been revised downward for 2025 and 2026, but still sees average inflation staying well within its price stability range through the forecast horizon.

    The new projections put inflation at just 0.2% in 2025 (down from 0.4%), 0.5% in 2026 (down from 0.8%) and 0.7% in 2027 (down slightly from 0.8%). These figures assume that the policy rate remains at zero throughout the period. SNB said that without today’s cut, the forecast would have been even lower.

    On the growth side, SNB acknowledged that the strength in Q1 GDP was driven largely by a pull-forward of US-bound exports — a pattern mirrored in other economies. When adjusted for these front-loaded flows, underlying momentum was “more moderate”.. As a result, growth is expected to slow again and remain “rather subdued” over the remainder of the year.  SNB projected GDP to rise just 1% to 1.5% this year and next.

    Full SNB statement here.

    SNB Poised to Cut, BoE Faces Divided Path

      By
      ActionForex
      -

      Attention is on two key central bank decisions today, SNB and BoE.

      SNB kicks off at 7:30 GMT and is widely expected to deliver a 25bps rate cut, bringing the policy rate back to 0.00%. Speculation about a return to negative rates has intensified after Swiss CPI dipped into deflation at -0.1% yoy in May. While Chair Martin Schlegel has downplayed the importance of a single data point, he has remained open to using negative rates again if disinflation proves persistent.

      The Swiss central bank faces a complicated backdrop. A stronger Swiss Franc—driven by haven flows amid the global trade war, Middle East conflict, and lingering Russia-Ukraine war—has intensified deflation risks. Euro’s strength on the back of expected fiscal expansion in Germany and the EU has provided some breathing room. Still, deflation pressures remain elevated. SNB is likely to signal readiness to act further, whether through rate cuts or FX intervention, should inflation remain subdued.

      Later in the day, BoE takes the stage at 11:00 GMT. The Bank is expected to keep its policy rate unchanged at 4.25%, with Governor Andrew Bailey maintaining a message of “gradual and cautious” easing. While recent economic data—including GDP and labor market indicators—have disappointed, BoE faces added complexity from surging oil prices driven by geopolitical tensions. The central bank may be wary of loosening policy too quickly under such volatile global conditions.

      Internal divisions remain a key story at the BoE. In May, the vote was notably split: five members favored a 25bps cut, two wanted a larger 50bps move, and two preferred holding. Today’s voting breakdown will give a clearer view of where consensus is forming. While a Reuters poll suggests most economists expect cuts in August and again in Q4, much will depend on how services inflation evolves and whether external shocks abate.

      Technically, GBP/CHF’s decline from 1.1200 is still in progress. Deeper fall is in favor as long as 1.1059 resistance holds. Next target is 61.8% retracement of 1.0610 to 1.1200 at 1.0835.

      Considering GBP/CHF was rejected by 55 W EMA as seen in the weekly chart, firm break of 1.0835 would argue that fall from 1.1675 is ready to resume through 1.0610 low.

      Australia jobs fall -2.5k in May, but full-time hiring and hours worked offer Support

        By
        ActionForex
        -

        May’s Australian employment data surprised to the downside, with a -2.5k decline compared to expectations of a 19.9k gain. Yet beneath the weak headline, the composition was stronger than it appears: full-time jobs surged 38.7k while part-time jobs plunged by -41.1k.

        Unemployment rate was unchanged at 4.1%, and the participation rate edged down from 67.1%to 67.0%, both suggesting a labor market that’s cooling slightly, but not cracking.

        A sharp 1.3% mom rebound in total hours worked provides further reassurance, marking a recovery from recent holiday and weather-driven softness.

        Full Australia employment release here.

        NZ GDP tops forecasts with 0.8% growth in Q1

          By
          ActionForex
          -

          New Zealand’s GDP grew 0.8% qoq in Q1, slightly ahead of expectations of 0.7% qoq. On a per capita basis, output rose 0.5% qoq.

          Gains were broad-based, with all major sectors contributing positively: goods-producing industries led the way at 1.3% qoq, followed by primary industries at 0.8% qoq, and services at 0.4% qoq. Manufacturing and business services were standout performers among the detailed industries, helping to drive the recovery.

          Despite the quarterly uptick, GDP contracted by 1.1% over the year to March 2025.

          Full NZ GDP release here.

          Fed holds steady but upgrades inflation path, slower easing ahead

            By
            ActionForex
            -

            As expected, Fed left interest rates unchanged at 4.25%–4.50% today, with all FOMC members voting in favor of the decision. The real focus was on the revised projections, which revealed a cautious shift: while two rate cuts remain penciled in for 2025, the pace of easing slows meaningfully beyond that.

            The median forecast now puts the federal funds rate at 3.6% by the end of 2026, up from 3.4% previously, and 3.4% by the end of 2027, up from 3.1%. This implies only one cut per year after 2025. The change suggests that the Fed is growing more concerned about stickier inflation, particularly as tariff-related price effects take longer to dissipate.

            Inflation forecasts were lifted meaningfully. Headline PCE inflation is now expected to run at 3.0% in 2025, up from 2.7% previously, before easing to 2.4% in 2026 and 2.1% in 2027. Core PCE projections followed a similar pattern, raised to 3.1% in 2025 from 2.8% in March. These changes reflect Fed’s acknowledgment of tariff-related price pressures filtering through the economy more persistently than previously assumed.

            Meanwhile, growth forecasts were trimmed, with real GDP now seen expanding just 1.4% in 2025, down from 1.7%. The 2026 estimate was also reduced from 1.8% to 1.6%. However, the unemployment rate is expected to remain relatively stable, only nudging up to 4.5% in 2025 and holding near that level through 2027.

            The slight upward drift in the unemployment forecast likely reflects this softer growth outlook, though the impact is not severe enough to force Fed’s hand.

            Overall, the message is clear: while cuts are still on the table, the Fed is prepared to ease more slowly and less deeply than markets had hoped. With tariffs adding upward pressure on prices but not severely denting the labor market, policymakers are likely to remain in wait-and-see mode, calibrating their response carefully.

            Full FOMC statement here and SEP.

            BoC’s Macklem: Ready to cut again if tariff drag grows and inflation stays contained

              By
              ActionForex
              -

              BoC Governor Tiff Macklem reinforced the Bank’s dovish lean today, stating that further rate cuts could be warranted if the economic fallout from US tariffs deepens and inflation pressures remain contained.

              “Overall, my colleagues on Governing Council and I agreed there could be a need for a further reduction in the policy interest rate if the effects of U.S. tariffs and uncertainty continued to spread through the economy and cost pressures on inflation were contained,” Macklem said in a speech today, outlining the Bank’s conditional easing bias.

              BoC has already cut rates seven times in this easing cycle. The June 4 decision to hold rates steady at 2.75% was shaped by three key concerns: lingering uncertainty, a mildly weaker domestic outlook, and some renewed firmness in core inflation. The mixed signals left policymakers in wait-and-see mode.

              Full speech of BoC’s Macklem here.

              US initial jobless claims fall to 245k vs exp 246k

                By
                ActionForex
                -

                US initial jobless claims fell -5k to 245k in the week ending June 14, slightly below expectation of 246k. Four-week moving average of initial claims rose 5k to 245.5k, highest since August 19, 2023.

                Continuing claims fell -6k to 1945k in the week ending June 7. Four-week moving average of continuing claims rose 13k to 1926k, highest since November 20, 2021.

                Full US jobless claims release here.

                ECB’s Panetta flags prolonged sub-2% inflation, cites trade and geopolitical risks

                  By
                  ActionForex
                  -

                  Italian ECB Governing Council member Fabio Panetta warned that Eurozone inflation is likely to remain below the 2% target for an extended period. Speaking at a conference today, Panetta said the region continues to face a “persistently weak” economy, which, coupled with subdued price pressures, calls for caution on the monetary policy front.

                  He pointed specifically to “substantial” risks surrounding US trade policy and the Middle East conflict. These factors, Panetta said, make it “difficult to quantify” the clouded outlook.

                  “Against this backdrop, the ECB’s Governing Council, at its most recent meeting, reaffirmed a flexible approach, keeping its options open,” he said. “It will continue to take decisions on a meeting-by-meeting basis, without pre-committing to a defined course for monetary policy,” he added.

                  Eurozone CPI finalized at 1.9% in May, disinflation takes hold as services inflation softens

                    By
                    ActionForex
                    -

                    Final Eurozone inflation figures for May confirmed further softening in price pressures, with headline CPI easing to 1.9% yoy from April’s 2.2% yoy. Core CPI (ex energy, food, alcohol & tobacco) also moderated to 2.3% yoy from 2.7% yoy. Services inflation, a key component closely tracked by ECB, slowed markedly from 4.0% yoy to 3.2% yoy, contributing to the broader disinflation trend across the bloc.

                    According to Eurostat, the largest contribution to the overall annual inflation rate came from services (+1.47 percentage points), followed by food, alcohol, and tobacco (+0.62 pp). Non-energy industrial goods added a modest +0.16 pp, while energy dragged the headline rate down by -0.34 pp. The moderation in services inflation is especially important given its linkage to wage growth.

                    Looking across the EU, headline inflation was steady at 2.2%, but divergence across member states is stark. Cyprus, France, and Ireland posted the lowest annual rates at 0.4%, 0.6%, and 1.4% respectively, while Romania, Estonia, and Hungary topped the inflation chart with rates above 4.5%. Annual inflation declined in 14 member states compared to April.

                    Full Eurozone CPI final release here.

                    UK CPI slows to 3.3% in May, but goods prices surges to highest since late 2023

                      By
                      ActionForex
                      -

                      UK headline CPI eased from 3.5% yoy to yoy in May, slightly above expectations of 3.3% yoy. Core CPI (excluding energy, food, alcohol and tobacco) also slowed from 3.8% to 3.5%, in line with forecasts.

                      While the overall trend points to gradual disinflation, markets might pay more attention to the reacceleration in goods prices, which rose to 2.0% yoy, the highest rate since November 2023.

                      Services inflation, however, showed a more meaningful decline, falling from 5.4% yoy to 4.7% yoy, suggesting underlying pressures are softening.

                      On a monthly basis, CPI rose by 0.2% mom, matching expectations.

                      Full UK CPI release here.

                      Fed to hold at 4.25–4.50%, eyes on (any) dot plot shift

                        By
                        ActionForex
                        -

                        Fed is all but certain to keep its target rate unchanged at 4.25–4.50% today, with fed fund futures assigning a near-unanimous 99.9% probability to that outcome. Similarly, the likelihood of any move in July is negligible, with markets pricing in an 85% chance that rates will remain on hold. Instead, the focus is on the September meeting, where futures suggest a roughly 63% chance of Fed resume its easing cycle.

                        The biggest variable in today’s announcement will be the updated Summary of Economic Projections, especially the dot plot. In March, the median forecast signaled two rate cuts in 2025. However, that view was narrowly held, and it would take just two FOMC members adjusting their dots to shift the median forecast to one cut.


                        However, the inflation and growth projections themselves may offer limited clarity due to the lingering uncertainty over trade policy. The 90-day reciprocal tariff truce expires in early July, and with no clear signal from Washington, Fed is unlikely to factor tariff impacts heavily into its base case just yet.

                        Chair Jerome Powell is expected to reiterate his recent message that “policy is in a good place” and that there is no rush to cut. Investors will watch closely for any tone shift in his comments on labor market softening and disinflation trends, but the overall message will likely reinforce Fed’s preference for patience. With no new direction expected, market reactions are likely to be limited in the immediate aftermath of the meeting.

                        Technically, DOW’s rally attempt this week lacks conviction. Bearish divergence condition in D MACD suggests that a short term top could have already formed at 43115.69. Deeper pull back is likely in the near term. Firm break of 41352.09 support will bring deeper fall to 38.2% retracement of 36611.78 to 43115.69 at 40631.20 at least, even still as a corrective move to the rally from 36611.78, not to mention that there is risk of near term bearish reversal.

                        Japan’s exports slide – 1.7% yoy in May as auto tariffs from US take toll

                          By
                          ActionForex
                          -

                          Japan’s trade data for May revealed growing pressure on its export sector, with headline exports falling -1.7% yoy to JPY 8.135T. Imports dropped -7.7% yoy to JPY 8.773T. The resulting trade deficit stood at JPY -637.6B.

                          Of particular concern was the sharp -11.1% fall in exports to the US, where car shipments plunged -24.7% yoy on the immediate impact of US tariffs.

                          Despite posting a trade surplus of JPY 451.7B with the US, the bilateral trend was negative. Imports from the US dropped -13.5% yoy. Japanese exporters are now grappling with a 25% tariff on autos and auto parts, plus a 10% baseline levy on all other goods. Steel and aluminum products have also been hit with a 50% tariff in early June.

                          On a seasonally adjusted basis, exports edged up just 0.1% mom, while imports declined -0.3% mom, leaving a narrower but still negative trade balance of JPY -305B.

                          US retail sales drop sharply by -0.9% mom in May

                            By
                            ActionForex
                            -

                            US retail sales declined more than expected in May, falling -0.9% month-on-month to USD 715.4B, well below the forecasted -0.6% mom drop.

                            The weakness was broad-based, with ex-auto sales falling -0.3% mom and ex-gasoline sales down -0.8% mom. Even the core control group—excluding autos and gasoline—registered a -0.1% mom decline, suggesting slowing momentum in discretionary consumption.

                            Despite a solid 4.5% yoy gain for the March–May period, today’s figures raise fresh doubts about the strength of US consumer spending heading into the summer.

                            Full US retail sales release here.

                            German ZEW surges to 47.5, points to post-stagnation recovery

                              By
                              ActionForex
                              -

                              Investor confidence in the Eurozone surged in June, with ZEW Economic Sentiment readings for both Germany and the wider region easily beating expectations.

                              Germany’s headline sentiment index jumped from 25.2 to 47.5, well above the expected 34.5, while the current situation gauge improved from -82 to -72. Eurozone-wide, sentiment rose from 11.6 to 35.3, and the current conditions index climbed 11.7 points to -30.7.

                              ZEW President Achim Wambach attributed the “tangible improvement” to growth in investment and consumer demand, adding that fiscal policy announcements from Germany’s new government appear to be supporting confidence.

                              The data suggests that the prolonged period of stagnation in Europe’s largest economy may be nearing an end. Combined with the ECB’s recent interest rate cuts, momentum may be building toward a long-awaited recovery.

                              Full German ZEW release here.

                              BoJ maintains policy, expects gradual rebound in inflation after near term weakness

                                By
                                ActionForex
                                -

                                BoJ kept its short-term interest rate unchanged at 0.5% in a unanimous decision today, while sticking with its current bond tapering program through March 2026. Looking further out, the central bank introduced a new bond purchase schedule for fiscal 2026, planning to reduce monthly purchases by JPY 200B each quarter, bringing the total to JPY 2T per month by March 2027.

                                In its statement, the BoJ downgraded its growth outlook, noting that Japan’s economy is “likely to moderate” in the near term as overseas economies slow and domestic corporate profits weaken. While accommodative financial conditions should provide some support, the central bank only expects a modest recovery later as global growth returns.

                                On inflation, the impact from food and import price increases is “expected to wane”, while underlying CPI is likely to remain “sluggish” due to a slowing economy. However, the bank anticipates that inflation will gradually pick up over time, supported by rising medium- to long-term inflation expectations and a growing “sense of labor shortage” as the economy recovers.

                                BoJ also acknowledged “extremely uncertain” outlook around the global trade and policy environment, warning of spillovers to Japan’s financial markets and inflation outlook. The statement emphasized the need to closely monitor foreign exchange developments and their broader implications.

                                Full BoJ statement here.

                                Swiss government cuts GDP forecast, warns of below-average growth in 2025–26

                                  By
                                  ActionForex
                                  -

                                  Switzerland’s Federal Government Expert Group has lowered its economic growth forecasts, citing persistent global trade uncertainty and weaker investment momentum. GDP, adjusted for sporting events, is now projected to grow just 1.3% in 2025 and 1.2% in 2026, down from March’s forecasts of 1.4% and 1.6%, respectively.

                                  These figures imply a period of significantly below-average growth for the Swiss economy, even under the assumption that the recent US import tariffs remain capped at current levels and that the trade conflict does not escalate further.

                                  The inflation forecast for 2025 has been revised down to just 0.1%. In 2026, inflation is projected to pick up to 0.5%.

                                  Full Swiss SECO forecast release here.

                                  ECB’s de Guindos sees inflation risks balanced, Euro strength not a concern

                                    By
                                    ActionForex
                                    -

                                    In a Reuters interview, ECB Vice President Luis de Guindos downplayed concerns over a return to the ultra-low inflation era of the 2010s, despite the recent strengthening of Euro. De Guindos acknowledged that these developments could weigh on headline inflation but emphasized that “the risk of undershooting is very limited.” He maintained that inflation risks are now “balanced”. Euro’s recent appreciation was neither rapid nor volatile, and therefore “not going to be a big obstacle” at 1.15 level.

                                    De Guindos expressed confidence that inflation will rebound after dipping to 1.4% in Q1 2026, citing a still-tight labor market and sustained wage pressures. Compensation growth, supported by union demands, is expected to remain near 3%. This aligns with ECB’s medium-term outlook of returning inflation to its 2% target.

                                    While stopping short of explicitly endorsing a pause, de Guindos indicated that market pricing for just one more rate cut, potentially later this year, was consistent with ECB President Christine Lagarde’s latest messaging.

                                    “Markets have understood perfectly well what the President said about being in a good position,” he noted, adding that investors now correctly anticipate that the ECB is nearing the end of its easing cycle.

                                    ECB’s Nagel warns against premature policy commitment

                                      By
                                      ActionForex
                                      -

                                      German ECB Governing Council member Joachim Nagel struck a cautious tone at a conference today, warning against locking in any specific policy path amid persistent global uncertainty.

                                      Markets currently price in only one more rate cut by year-end. But Nagel resisted endorsing that outlook, stressing that rapidly evolving conditions make it unwise to pre-commit.

                                      “We must keep our eyes and ears open for the risks to price stability,” he said, pointing specifically to current developments in the Middle East as a source of heightened uncertainty.

                                      Nagel also offered a downbeat assessment of Germany’s near-term prospects, forecasting stagnation in Q2 and flagging the global trade war as a significant drag. He estimated that escalating trade tensions could shave as much as 0.75 percentage points off German growth over the medium term.

                                      China’s retail sales shine with 6.4% yoy growth, but production and investment drag continues

                                        By
                                        ActionForex
                                        -

                                        China’s latest economic data for May paints a mixed picture. Industrial production rose 5.8% yoy, falling short of the expected 6.0% and reflecting lingering weakness in external demand. This comes on the heels of a sharp -34.5% yoy drop in exports to the US, despite the mid-May rollback of some tariffs. The full impact of reduced tariffs is expected to emerge more clearly in June though.

                                        In contrast, retail sales provided a bright spot, jumping 6.4% yoy and beating forecasts of 5.0% yoy. The rebound was supported by the government’s aggressive push to boost consumer spending through its appliance and vehicle trade-in program. The Ministry of Commerce reported that the campaign has already generated over CNY 1.1m in sales this year.

                                        However, fixed asset investment remains a drag, growing only 3.7% ytd yoy versus expectations of 3.9%. The persistent weakness in property investment, down 10.7% in the first five months of the year, highlights ongoing strain in the real estate sector.

                                        NZ BNZ services slumps to 44.0, economy returning to recession

                                          By
                                          ActionForex
                                          -

                                          New Zealand’s services sector took a steep turn downward in May, with the BusinessNZ Performance of Services Index plunging from 48.1 to 44.0, the lowest reading since June 2024. Activity and new orders led the decline, falling from 46.7 and 50.2 to 40.1 and 43.2 respectively, as businesses reported broad-based weakness in demand. Employment also edged down from 47.9 to 47.2.

                                          Sentiment on the ground paints an equally grim picture. Negative commentary from survey respondents rose to 65.6%, up from 61.8% in April. Businesses cited reduced consumer spending, revenue declines, and heightened uncertainty over inflation, interest rates, and the economic outlook. Many reported that customers are delaying decisions and becoming more cautious in their spending—mirroring trends typically seen during periods of economic stress.

                                          BNZ Senior Economist Doug Steel noted that the PSI collapse closely follows the earlier fall in the Performance of Manufacturing Index, reinforcing signs of widespread economic fragility. With both key sectors now contracting, concerns are rising that New Zealand may be “returning to recession”.

                                          Full NZ BNZ PSI release here.

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