Having delivered 500bps of tightening this cycle, the June FOMC meeting is likely to conclude with policy being left unchanged, as policymakers seek to take their time in digesting the lagged impacts of the rate hikes that have already been enacted. Nevertheless, it is likely premature for Chair Powell & Co. to be taking a victory lap in the battle against inflation, hence a conditional tightening bias is likely to remain.

The June ECB decision approaches with, for the first time in a long while, data increasingly stacked in favour of the Governing Council’s doves, as inflation shows signs of peaking, and economic momentum wanes. Despite this, another 25bps hike appears locked in this week, with guidance set to remain relatively hawkish, indicating that the tightening cycle still has some distance still to run.

Looking at the calendar for the week ahead and it’s a quiet affair by way of known event risks to catalyse. We have tier 1 idiosyncratic event risks, with the RBA and BoC meetings holding the potential for a 25bp hike. However, I’d expect the central focus to remain on the USD, US rates pricing, US regional banks and whether we see a further positive flow into the HK50, CHINAH and CN50.