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Yesterday's US payrolls were supposed to deliver key input for the Fed decision making process as Fed Chair Warsh at the start of its mandate promised that the US central bank will deliver on its price stability mandate. Strong US payrolls over previous months suggested that the 'second pillar' of the Fed's mandate, maximum employment, didn't need any Fed attention/support for now. However, the June payrolls missed expectations. One data set of course doesn't change the broader picture, but it also didn't raise the momentum for the Fed to take action. The US in June added a net 57k of jobs vs 113k expected. The numbers of the previous two months also were downwardly revised by 74k. The negative surprise was mainly due to an unexpected negative contribution of leisure and hospitality (-61k). Professional business services (+36k) and private education and health (+69k) contributed positively. The unemployment rate (derived from a different consumer survey) eased from 4.3% to 4.2%, but this was mainly due to decline in labour market participation (labour force declined 720k and employment 'only' declined 507k according to this survey). Average hourly wages at 0.3% M/M and 3.5% Y/Y were as expected. The 'remarkable swings' in some of the underlying data at least suggest that there might be a case for Fed Warsh's initiative to let one of his task forces take a look at the 'use and reliance on existing data sources' when assessing monetary policy. Whatever, the overall message was that the US labour market probably still is in some kind of equilibrium but that there is no need for the Fed to rush to action due to a further tightening of the labour market. The US yield curve steepened even as changes at the end of the day were very limited. The 2-y yield declined 3.7 bps. The 30-y rose slightly (+1.5 bps). Markets now only discounted less than 20% chance of a Fed rate hike at the end of July meeting. Such a 25 bps step is now only fully priced in by the end of the year. Aside from the payrolls, EMU (but also UK and Japanese bond markets) during the day were also captured in a broad steepening move. German yields yesterday rose between 2.3 bps (2-y) and 4.5 bps (30-y). On FX markets, the weaker payrolls pushed the dollar into the defensive. DXY dropped from 101.4 to 100.86. EUR/USD regained the 1.14 big figure (close 1.1432). Even the yen, which was fighting an uphill battle of late, rebounded from Wednesday's multi-year lows against the dollar. USD/JPY dropped from 162.6 to close near 161.1. Equities got a temporary intraday boost after the report, but especially the Nasdaq struggled to hold these gains. The Dow (+1.14%) closed at an all-time high. The Nasdaq lost 0.8% in an apparent rotation move.

Today US markets are closed (long weekend for Independence Day). In Europe and the UK only some second-tier data are on the agenda. One can expect order-driven, technical trading. Yen traders will be on alert for potential yen interventions by Japanese authorities in an environment of lower market liquidity. We also keep an eye on the dollar as headlines suggest that the issue of Fed independence apparently isn't completely muted yet.

News & Views

The Trump administration and its allies are actively exploring ways to remove members of the Fed board and to replace them with the president's own picks, Bloomberg reported citing people familiar with the matter. That followed the Supreme Court's ruling this week that overruled the attempted sacking of governor Cook over alleged mortgage fraud. The Court said president Trump had failed to provide Cook procedures to properly dispute the allegations against her. The administration now sees the decision as providing a procedural roadmap for how to actually remove Cook from the job. Meanwhile, White House frustration is growing again over former chair Powell to stay on as Board member, going against protocol. While the inquiry into the out-of-budget renovation of the Fed headquarters was dropped in April, the investigation remains prone to be reopened. The administration is also zeroing in on regional Fed members. The search for a new Atlanta Fed president after Bostic stepped down in February was said to be halted until the new Fed chair Warsh, a Trump pick, was sworn in so that he would have a say in the process as well.

For some key European leaders, it seems all but inevitable that ships transiting through the Strait of Hormuz will have to pay fees to Iran and Oman, another Bloomberg exclusive reported. While not reflecting the government's official stance, several Gulf states hold the same view. Both Oman and Iran have said there's no way of going back to the pre-war free-for-all situation. Oman is reportedly looking at the Malacca Strait in Asia as a leading example. This key maritime route is managed by Indonesia, Malaysia and Singapore with these countries charging vessels for any navigation and security services needed.

Our summary of recent economic events and what to expect in the weeks ahead.

Canadian Highlights

• The July 1st CUSMA extension deadline came and went, but this outcome was well telegraphed and the status quo, in terms of U.S. tariffs on Canada, remains.
• Canada's economy popped in April and likely grew again in May. This puts Q2 growth on track to print above 2% annualized, easing recession concerns.
• Lower oil prices should help near-term inflation, while underlying slack and contained core inflation pressures strengthen the case for a Bank of Canada hold stance.

U.S. Highlights

• U.S. equities had a stellar first half performance this year, with the S&P 500 and NASDAQ rising 9.5% and 13%, respectively.
• Nonfarm employment moderated in June, but underlying hiring trends remain reasonably solid. The unemployment rate dipped to a twelve-month low of 4.2%.
• The ISM Manufacturing Index remained in expansionary territory for the sixth month in June, while vehicle sales hit a nine-month high of 16.5 million.

Canada – GDP Fireworks Ahead of Canada Day

In this holiday shortened week, there were still some notable moves in financial markets. Oil slid lower and, more broadly, has plunged since early June on hopes of a U.S.-Iran peace deal and improved traffic through the Strait of Hormuz. Canadian bond yields climbed during the week but eased back a bit today, driven by dynamics in the U.S. For its part, the Canadian dollar was unchanged at about 70 cents U.S. but has been tumbling since early May, pressured by hawkish U.S. central bank messaging.

The recent slide in oil prices is certainly a welcome development from an inflation perspective and will be reflected in June's CPI print. However, there could still be some upside to oil prices after this initial downswing. Global inventory buffers were steadily drawn down during the conflict and the summer driving season is set to ramp up.

Nonetheless, our forecast assumes that oil prices are past their peak. The Bank of Canada will breathe a sigh of relief if that turns out to be true, although policymakers were treated to some fireworks ahead of the Canada Day holiday, courtesy of a well-timed surge in monthly GDP. Indeed, Canadian GDP shook off some winter blues, popping by 0.5% month-on-month in April. This should help quell recession chatter, with April's gain marking the largest such increase since July 2025.

On the less-positive side, the July 1st deadline to extend the CUSMA agreement for another 16 years came and went this week. However, this outcome was telegraphed well ahead of time by Canada, U.S. and Mexico. For now, the status quo remains, with most of Canada's exports to the U.S. tariff-free, but with punishing levies on sectors such as steel, aluminum and autos still in place. The process now moves to annual reviews (which will keep the cloud of uncertainty hanging), although parties can strike a deal at any time. We have tentative evidence that the worst of the trade conflict may be in the rearview. For instance, manufacturing GDP has risen in two of the last three months through April, and may have increased again in May given a pickup in hiring.

Incorporating StatCan's GDP guidance for May, Canada's economy is now on track to grow at a pace above 2% annualized in the second quarter. This is stronger than what the Bank of Canada expected in its April projection. Even still, it doesn't materially change our view on rates. Remember that the bounce back in GDP comes on the heels of several quarters of soft activity, meaning that the economy is still likely in excess supply. Core inflation remains well behaved, with economic slack likely to apply downward pressure. Next week brings a slew of important data, including the Bank of Canada's Business Outlook Survey (BOS) and the June read on the job market. The prior BOS offered evidence that businesses are adjusting to the trade war, while Canadian hiring surged in May (raising the risk of some giveback in next week's report). We'll be monitoring these closely, but it would take some surprises to shake us from the view the Bank will remain on hold this year.

Rishi Sondhi, Economist

U.S. – Celebrating America's Exceptionalism

This weekend will mark America's 250th anniversary, but for financial markets, this holiday shortened week also brought a brief halftime for calendar 2026. It's been an eventful first six months of the year, marked by a flurry of trade deals, further shifts in tariff policies, a new chapter for the Federal Reserve and plenty of geopolitical tensions. Through it all, financial markets have remained remarkably calm. The S&P 500 rose 9.5% through the first half of the year while the NASDAQ was up nearly 13% – or more than double last year's mid-year performance. It remains to be seen whether the run is something to cheer or fear, but one thing is for certain, the AI buildup and the expected productivity enhancements that it could eventually deliver have been pivotal catalysts underpinning the bull rally.

Beyond the AI push, a return to the American exceptionalism trade has also offered a tailwind for equities. U.S. growth is tracking north of 2% for 2026, or a multiple of any of the other G7 nations. And perhaps more encouragingly, the balance of risks for the U.S. outlook feels tilted to the upside. The U.S.-Iran peace deal has quickly returned energy prices to pre-conflict levels, dragging gas prices lower. This is good news for the consumer. At the same time, the labor market has clearly turned a corner after grinding through a soft patch last year. Nonfarm payrolls rose by 57k in June, a moderation from prior months, but a decent print nonetheless. Smoothing through the volatility, hiring has averaged 111k and 92k over the last three and six months, respectively. This is well above the breakeven rate, which helped to push the unemployment rate to a twelve-month low of 4.2%. But it wasn't all good news, a sharp drop in the labor force was entirely driven by a decline of over 800k prime working age individuals (i.e., 25 to 54 years old). It's too early to know what drove the decline or whether it's simply related to volatility. But the magnitude is noteworthy and something worth monitoring in the months ahead.

Other data out this week also reinforced America's economic resilience. June vehicle sales rose to a nine-month high of 16.5M, while the ISM Manufacturing Index remained in expansionary territory for the sixth consecutive month. Importantly, both production and new orders continue to expand at decent clips. And while input prices remain elevated, the sub-index fell to a four-month low, suggesting the worst of the cost pressures stemming from the energy shock are now in the rearview mirror.

This is good news for Fed officials, who are hunting for any signs of slowing price pressures amid continued concerns of elevated inflation. In his first public appearance since the June press conference, Chair Warsh underscored the Fed's commitment to return price stability, but stopped short of giving any forward guidance. While this leaves the impression that every meeting is "live" we would argue that the data released since the last FOMC meeting alongside the sharp pullback in energy prices reduces the odds of the Fed hiking rates this summer.

Next week's release of the June FOMC meeting minutes should provide further insight into what could shift a divided Committee toward additional tightening, although we continue to expect the Fed to remain on hold as recent inflation strength appears largely driven by fading supply-side factors rather than overheating demand. Abroad, Japan's labor cash earnings data will be closely watched for signs that wage growth remains consistent with the Bank of Japan's policy normalization path. In Canada, we expect labor market conditions to remain broadly stable despite some moderation in hiring after May's strong employment gain, supporting a patient approach from the Bank of Canada. In emerging markets, Mexico's June CPI report should show further progress on disinflation, but persistent services inflation is likely to keep Banxico on hold.

United States:

• FOMC Meeting Minutes (Wednesday)

G10 Economies:

• Japan Labor Cash Earnings (Tuesday), Canada Labor Force Survey (Friday)

Emerging Markets:

• Mexico CPI (Thursday)

U.S. Week Ahead

FOMC Meeting Minutes — Wednesday

We will look to next week's FOMC minutes for any signs of what could shift a divided Committee from a hold toward rate hikes. The dot plot from the last meeting made clear that policymakers are split on whether rate hikes are warranted, but with forward guidance getting tamped down under Chair Warsh, the Fed's reaction function remains uncertain in terms of what exactly would build broader support for more restrictive policy.

We will be looking to whether a majority of participants view the recent pickup in inflation as persistent enough to warrant additional tightening or as primarily a temporary supply-shock. We will also be interested to see the extent to which Committee members view the labor market/the demand side of the economy as an inflationary problem.

While the minutes may lean hawkish, we continue to view recent inflation strength as being driven largely by supply side factors, including tariffs and energy, that should fade over time. Since the June meeting, oil prices have fallen further, which should help ease concerns that energy-related inflation will broaden further. And the June employment report showed no signs that the labor market is overheating or contributing to broader inflationary pressures. We thus continue to expect the FOMC to keep the funds rate on hold for the foreseeable future.

G10 Week Ahead

Japan Labor Cash Earnings — Tuesday

With Japan's labor cash earnings for May due next week, the release will offer a fresh read on whether the wage-price cycle remains intact. The Bank of Japan (BoJ) continues to signal conviction in its path toward policy normalization, as April labor cash earnings and ordinary time earnings (the BoJ's preferred gauge of underlying wage momentum) rose 3.6% and 3.3% year over year, respectively. This year's Shunto negotiations delivered another round of strong pay gains, with labor unions securing average wage increases of more than 5% for a third consecutive year, effective from April. Given the limited coverage of union workers and the lagged pass-through from negotiated settlements to realized earnings, wage growth should remain supported in the months ahead. Lower oil prices could also help ease margin pressure for smaller firms, supporting a broader pass-through of negotiated wage increases.

While inflation has been soft, the fading of government subsidies and impact of a weaker yen on import prices should contribute to a gradual pickup in inflation. Combined with resilient GDP growth and a solid Q2 Tankan report, a strong wage print would support the case for further tightening. As such, we continue to expect the BoJ to deliver a 25 bps rate hike in Q3 (most likely September), bringing the policy rate to a terminal level of 1.25% by year-end.

Canada Labor Force Survey — Friday

Canada's labor market remains soft, though weakness earlier in the year was met with a sharp rebound in May. Even so, employment is up less than 1% from a year ago, underscoring the sluggish pace of hiring beneath the month-to-month volatility. While demand has softened, recent gains having been concentrated in full-time positions, rather than part-time work, is a sign of stability.

Labor supply constraints are also easing only gradually. An aging workforce and slower immigration flows should continue to limit labor force growth, helping keep a lid on any significant increase in unemployment. As a result, we expect the jobless rate to remain broadly within the 6.5–7.1% range that has prevailed over the past 12–18 months.

Following the strongest monthly employment gain since late 2024, some payback in June would not be surprising. Still, our broader assessment is that labor market conditions are stabilizing rather than deteriorating. Wage growth remains positive but is no longer accelerating materially, consistent with labor demand that has softened enough to reduce inflation pressures but not enough to raise meaningful recession concerns. Taken together, the labor market argues for continued patience from the Bank of Canada, keeping policy on hold for the foreseeable future.

EM Week Ahead

Mexico CPI — Thursday

Mexico's June CPI release next week should provide more clarity on whether disinflation is broadening enough to reopen the door to rate cuts. Based on the mid-month data, we expect headline and core inflation to slow to 3.75% year over year and 4.10%, respectively, from 3.94% and 4.19% in May. Still, core services inflation remains sticky, which should keep Banxico cautious.

At its June meeting, Banxico's Governing Board unanimously held the Overnight Rate at 6.50% and suggested that the current policy setting remains appropriate for an extended period. Policymakers also revised their Q2-2026 headline inflation forecast slightly lower, while the core forecast moved slightly higher.

Our base case remains for Banxico to stay on hold through year-end and into 2027. That said, risks are tilted toward a cut rather than a hike. Banxico expects growth to rebound in Q2 after contracting in Q1, then expand at a steady pace. If activity instead continues to struggle and disinflation broadens further, a rate cut could come by year-end.

Hello traders. In this technical article we’re going to take a quick look at the Elliott Wave charts of FTSE Index published in members area of the website.

As our members know, FTSE  made a pullback that unfolded as an Elliott Wave Zig Zag pattern. Price completed a clear 3-wave move down from the peak and found support at the Equal Legs zone (buying area).

In the following analysis, we explain the Elliott Wave pattern and the market outlook.

FTSE Elliott Wave 1  Hour  Chart 06.22.2026

FTSE is currently forming an intraday three-wave pullback from recent highs. We identified a buying zone by measuring the Equal Legs area using the Fibonacci extension tool, with a projected relative to b. The ideal support area comes in at 10370.44-10275.23. The correction is not complete yet, and the index could see more downside in the near term within the marked buying zone. As long as price holds within this region, we expect buyers to step in and the rally to resume toward new highs.

90% of traders fail because they don’t understand market patterns. Are you in the top 10%? Test yourself with this advanced Elliott Wave Test

FTSE Elliott Wave 1  Hour  Chart 07.03.2026

The Index has found buyers at the Equal Legs zone , just as expected. The correction ended at the 10333.17 low, and since then, FTSE is giving us a rally. As a result, any long positions from the equal legs zone are now risk-free.

Important note: Our analysis is not based on Elliott Wave in isolation. We perform detailed higher-time-frame cycle analysis, which shows an incomplete market structure. This is one of the key drivers of price action, along with correlation analysis and broader market context.

We also teach our members in live analysis sessions how to identify incomplete bullish and bearish sequences.  Even a  14-day trial,  is enough to noticeably improve your trading analysis and forecasting approach.

Japan's service sector returned to expansion in June, helping lift overall private-sector activity to its strongest pace in three months. The final S&P Global Japan Services PMI Business Activity Index rose to 52.2 from the neutral 50.0 reading in May, marking renewed growth after a brief pause. The Composite Output Index, which combines manufacturing and services, climbed from 51.1 to 52.8, reflecting stronger manufacturing output alongside a recovery in services activity.

Survey details suggested domestic demand remained the main driver of growth. According to S&P Global, new business across manufacturing and services expanded at the second-fastest pace in three years, supported largely by firmer domestic orders. External demand, however, was less supportive. New export business grew at its slowest pace in six months as service providers reported a noticeable decline in overseas demand, partly reflecting lower tourist arrivals. Business activity nevertheless continued to expand for the 14th time in the past 15 months, with firms citing higher volumes of new work and upcoming events.

Despite the improvement in activity, inflation pressures remained elevated. S&P Global said input costs rose at the fastest pace in four years as supply chains continued to feel the effects of the Middle East conflict, prompting another marked increase in selling prices. Firms were only slightly more optimistic about the outlook, with uncertainty surrounding geopolitical developments and rising costs tempering confidence. The survey suggests Japan's economy continues to expand at a moderate pace, though persistent cost pressures are likely to keep the Bank of Japan attentive to the inflation outlook in the months ahead.

Full Japan PMI Services final release here.

Key insights from the week that was.

This week’s RBA minutes provided more colour around the Monetary Policy Board’s (MPB) June deliberations. Overall, the MPB views the economy as “operating with excess demand and widespread inflationary pressures”. On the domestic front, there were “somewhat differing views” among MPB members regarding the extent of current capacity pressures, but they are nonetheless seen as elevated and a risk to the normalisation of inflation towards target. On the Middle East conflict, the MPB welcomed progress towards a resolution but still viewed the balance of risks as firmly skewed to the upside for inflation and the downside for growth. As such, “increasing the cash rate target” will be considered if required.

Last week’s speech from Deputy Governor Hauser shed more light on the RBA’s thinking on the relationship between inflation and unemployment. The main takeaway is that inflation tends to be more sensitive when the economy is already tight; but equally, that the policy trade-off in such a situation allows more scope to focus on bringing inflation down without a large cost to employment. These judgements underscore the RBA’s successive rate hikes earlier in the year and their subsequent decision to pause and assess in June.

The RBA is also closely monitoring trends in the housing market and the implications for wealth and consumption. Cotality’s latest home value index fell 0.4% in June, Sydney and Melbourne’s correction deepening as price growth slowed from a higher base across the smaller capitals. Together with signs of slowing credit growth, evidence that the RBA’s rate hikes and sentiment are weighing on the market is mounting. Westpac is forecasting further house price declines through the remainder of the year, though strong population growth and tight supply will limit their scale.

Before moving offshore, a final note on trade. The goods trade balance surprised materially to the downside in May, flipping from a surplus of $1.4bn to a deficit of $3.0bn, the largest in over a decade. Volatility in gold flows was one of the chief culprits, accentuated by a surprisingly large fall in iron ore exports and a solid lift in car imports (i.e. EVs). Imports of equipment related to the data centre build-out have moderated but are still well above historical norms. Expect continued volatility over the coming year(s).

Over in the US, nonfarm payrolls disappointed in June, with only 57k jobs created and April/May revised down by a combined 74k. The three-month average is now 111k versus 164k in May, though June’s result still suggests labour demand is at least keeping pace with supply. Household survey employment is materially weaker, however, declining 507k in June and averaging a loss of 195k jobs per month over the past three. Further, continuing the trend of the past 18 months, the participation rate fell to 61.5% in June; had participation held steady since January 2025, the unemployment rate would now be above 5%, not the reported 4.2%. Taken together, these outcomes imply the labour market is most likely marking time. That said, the downside risks the household survey allude to are worth close attention.

Also consistent with the FOMC becoming less concerned with inflation in coming months was the latest ISM manufacturing report. Most notably, the prices component fell 9.1pts to 73, signalling a turn in upstream price pressures. Together with the decline in oil benchmarks in recent weeks and the available detail of both the CPI and PPI, which have offered little evidence of material secondary inflation effects from the Middle East conflict, this moderation should alleviate concerns amongst the FOMC that a sustained re-acceleration in consumer inflation is a probable risk.

The preliminary release for June Euro Area inflation was also supportive of an increasingly benign inflation outlook, prices falling 0.1% versus a 0.1% expected gain. The improvement was broad based too, annual headline inflation moderating to 2.8%yr from 3.2%yr and core inflation to 2.4%yr from 2.6%yr. Importantly, this was achieved while the labour market remains historically tight.

FOMC Chair Kevin Warsh picked up on this improvement in inflation prospects at the ECB’s Sintra Forum on Central Banking, highlighting that inflation expectations and risks "have come down" in recent weeks. Admittedly he is focused on the US but, per the Euro Area data above, the narrative is broadly true for developed economies across the northern hemisphere. The keynote panel at the conference also discussed several other important topics including the need for greater flexibility and timeliness when conducting monetary policy, how AI advances are being factored into decision making and the importance of safeguarding financial stability.

Finally to Asia where the Q2 Tankan was received positively, participants focusing on the increase in large manufacturer sentiment from 17 to 22. Other outcomes were less positive, however. Smaller manufacturers are more cautious, as are service firms. R&D expectations were also revised down, and profitability and labour market indicators came under pressure. Overall, the survey suggests the BoJ needs to keep evolving risks in mind as they continue to normalise policy.

To achieve its development ambitions, China's industrial might must pay off for households.

The first half of 2026 has highlighted China's industrial strength, the trade surplus widening back to near record highs and investment in high-tech manufacturing and services continuing at pace while authorities' strategic reserves and pro-active decision making offered robust protection against an extended loss of oil supply. Ahead, China's greatest opportunity is also its biggest threat – a recovery in the Chinese consumer.

Before we delve into the detail of the consumer outlook, it is important to dig deeper into recent industrial developments and their implications. Having narrowed sharply in March to USD51bn, China's monthly trade surplus snapped back to USD85bn in April and USD105bn in May. The average for the year-to-date is now USD91bn, just inside 2025's USD99bn and roughly triple 2019's USD35bn. May's 19% annual export growth is arguably outsized, but high single-digit gains are possible, if not probable, on a recurring basis. Note that it isn't just export demand that is buoying the surplus. Chinese production is also increasingly outcompeting imports when it comes to domestic demand, motor vehicles being a prime example. This is also contributing to the widening trade surplus year-on-year.

Total fixed asset investment has disappointed of late, year-to-date growth contracting 4.1% in May. While a loss of momentum in utilities and transport and mixed results within manufacturing allowed the headline contraction to occur, it was education, health and property that drove the decline. With respect to trade income generation, it is important to recognise that investment has only plateaued after years of rapid growth. Each year that new investment holds at this level, a wave of additional capacity and efficiency is unleashed. Strengthening relationships with neighbouring nations also hold considerable promise. Indonesia and Vietnam are prime examples, having youthful and driven populations of circa 300mn and 100mn and Governments open to large-scale foreign investment.

The compounding income returns China has received through trade post pandemic should have resulted in a strong and confident household sector with burgeoning wealth. Yet, highlighted by annual nominal retail sales growth of -0.6% y/y and entrenched weakness in property, this is not the case. In part this is due to the hyper-competitive behaviour of Chinese firms which has suppressed profitability – an issue authorities are now seeking to redress through their anti-involution initiatives. But the primary cause of consumer hardship is instead the disconnect that has emerged between aggregate household income and the growth of Chinese industry. If consumers are to find their feet, the benefits of trade must pass through.

We expect this to occur but as a multi-stage, likely multi-year, structural process beginning with pro-active stimulus later this year. Initial steps are likely to focus on additional support for the housing sector and renewed subsidies for discretionary consumption. These steps are critical not only to incentivise current demand but also to promote employment in related sectors. Hiring by high-tech manufacturing and service firms is, in contrast, unlikely to accelerate given these sectors' long-standing preferences for capital over labour as well as the efficiency benefits of automation and AI. To receive direct benefits from China's industrial development, the average household will arguably need to wait until the equity valuations of these titans of industry reflect their future promise. Households will also need to have the confidence to put their wealth 'at risk'. Authorities could accelerate the development of this linkage via incentives to directly invest in financial securities and/or by building trust in wealth and retirement solutions, but we suspect this will not be an immediate priority.

If authorities take the initiative in coming months and reset the consumer story, GDP growth can be sustained at or above 4.5%, even as the impetus from trade fades. But, if the Government only guards against the downside, growth is likely to slow to 4.0% and become increasingly fragile.

With respect to currency markets, success with the consumer through 2028 should be enough for the Renminbi to sustainably appreciate back to 2022 and 2018's, then short-lived, highs against the US dollar around USD6.30. Breaking through that level is entirely possible, albeit more likely outside our current forecast window once the Renminbi's growing share of global trade and financial flows are more widely accepted. For China's competitiveness and the long-term trajectory of the currency, it is important to emphasise that the nation's economic and financial development are not occurring in a vacuum but rather in concert with the rest of Asia. On a trade-weighted basis, the anticipated currency gains will be limited and most likely offset by continued productivity wins.

The implications for Australia and our dollar are difficult to discern at this juncture. China continues to expand not only its production chain but also its sourcing network across Asia, Africa and Latin America. As such, while commodity prices should remain supportive, Australia is unlikely to receive a material, lasting dividend from increased commodity export volumes. Very clearly though, not only in China but across Asia, a broad range of new opportunities are opening up. If, as a nation, we lean into this economic and financial development, our productivity and income prospects will grow, benefitting the dollar. For now at least, the market is likely to take a wait-and-see approach with respect to our prospects, the Australian dollar lagging the performance of the Renminbi and potentially other nations across Asia who are poised to outperform.

Silver (XAGUSD) continues to exhibit an incomplete sequence from the January 29, 2026 high, suggesting that further downside remains possible. In the short term, the cycle from the May 14, 2026 high is unfolding as a double three Elliott Wave structure. From that peak, wave (W) concluded at 61.46, while the corrective rally in wave (X) terminated at 71.6. The market has since resumed lower in wave (Y), which is internally subdividing into another double three of lesser degree. This development underscores the persistence of bearish momentum within the broader corrective framework.

From wave (X), the initial wave W ended at 55.57. The subsequent rally in wave X is now advancing as a corrective move, designed to retrace the cycle from the June 18, 2026 high before the metal resumes its downward trajectory. As long as the pivot at 71.6 remains intact, rallies are expected to fail in either three or seven swings, reinforcing the case for continued weakness.

Resistance is projected within the 62–65 zone, defined by the 100% to 161.8% Fibonacci extension of wave ((a)). This area represents a critical inflection point where corrective strength may exhaust, paving the way for renewed selling pressure. Traders should monitor this region closely, as rejection from resistance would confirm the continuation of the larger bearish cycle.

Silver (XAGUSD) 60-Minute Elliott Wave Chart

XAGUSD Elliott Wave Video:

https://www.youtube.com/watch?v=bELKTwl-EsU

Key Highlights

• USD/JPY started a sharp downside correction from 162.85.
• It traded below a key bullish trend line with support at 161.85 on the 4-hour chart.
• Bitcoin started a recovery wave and climbed above $60,000.
• EUR/USD attempted a fresh increase but might face hurdles near 1.1500.

USD/JPY Technical Analysis

The US Dollar failed to continue higher against the Japanese Yen. USD/JPY peaked at 162.84 on TitanFX and started a sharp pullback.

Looking at the 4-hour chart, the pair declined below the 162.00 and 161.20 support levels. There was a clear move below the 50% Fib retracement level of the upward move from the 159.54 swing low to the 162.84 high.

Moreover, it traded below a key bullish trend line with support at 161.85. If there are more losses, the pair could find bids near 160.60. The first major support could be near 160.30, the 200 simple moving average (green, 4-hour), and the 76.4% Fib retracement.

A downside break and close below 160.30 might send the pair toward 158.80. Any more losses could open the doors for a test of 156.50.

On the upside, the bears might remain active near 161.20. The next major resistance might be 162.50. A close above 162.50 could open the doors for a larger increase. In the stated case, the bulls could aim for a move to 163.20.

Looking at EUR/USD, the bulls attempted a recovery wave from 1.1350, but they could struggle near the 1.1500 resistance.

Upcoming Key Economic Events:

• Euro Zone Services PMI for June 2026 – Forecast 48.9, versus 48.9 previous.
• UK Services PMI for June 2026 – Forecast 48.7, versus 48.7 previous.

AUDUSD: ⬆️ Buy

– AUDUSD reversed from support zone

– Likely to rise to resistance level 0.7000

AUDUSD currency pair recently reversed from the support zone between the support level 0.6865 (which stopped wave 2 in March) and the lower daily Bollinger Band.

This support zone was further strengthened by the support trendline of the daily down channel from May and 50% Fibonacci correction of the upward impulse from November.

Given the strong daily uptrend and strong US dollar sales seen across FX markets today, AUDUSD currency pair can be expected to rise to the next resistance level 0.7000.