The dollar got pummeled, Treasuries continued to surge higher, gold skyrocketed as the Fed aftermath was accompanied by an escalation in the Middle East. The biggest event of the month will likely be the Fed’s signal that most members are reading to begin an easing cycle. Powell’s press conference showed some reluctance, but it seems markets are certain the Fed will cut in July. If data deterioration is worst than expected, calls for a 50-basis cut at the July meeting will grow in the coming weeks.
The Bank of England kept rates steady in a unanimous vote, surprising some who expected Haldane and Saunders to follow through on their recent hawkish comments. The BOE mentioned that the market is not agreeing with their Brexit assumption view. No-deal risks are rising and since the BOE was expecting a smooth Brexit, we will likely see a long pause on a rate hike from the BOE. The bank cut their Q2 outlook from 0.2% to 0.0%.
Norway’s central bank delivered a rate hike as the rest of the advanced economies are contemplating easing or unleashing fresh stimulus into their domestic markets. The Norwegian economy has performed well and with recent upgrades to their forecasts, more hikes could be coming this year. Markets were expecting this to be the last hike, so we could see the Norwegian krone deliver further gains.