Current week is a volatile one, especially when it comes to stock markets. Massive sell-off on Wall Street in the middle of the week reminded investors about the uncertain economic landscape. Next week will be more about central banks with release of the FOMC minutes and an expected 50 bp rate hike from RBNZ. Apart from that, investors will also tune in for release of flash PMIs for May. Be sure to watch DE30, GOLD and NZDUSD next week.
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European stock exchanges were very volatile this week. While indices from the Old Continent gained at the beginning of the week, a strong sell-off occurred later on. Investors remain concerned about the economic outlook as downside risks mount. An update regarding the health of the economy will be provided on Tuesday with the release of flash PMI indices for May. French and German releases at 8:15 am BST and 8:30 am BST, respectively, will be the most closely watched. However, whether they serve as a trigger for rally or pullback remains to be seen.
FOMC minutes from May's meeting will be released next week on Wednesday, 7:00 pm BST. As always the document will be closely watched by market participants, especially as it will relate to the meeting when QT was announced. Protocol from the meeting may provide some more details regarding further path of interest rates hikes. However, amid a quickly changing economic landscape, speeches from Fed members may play an even more important role and provide a better understanding of sentiment which prevails among US central bankers. The latest Fed decision supported gold price but the rally was short-lived and precious metal quickly resumed downward move.
The Reserve Bank of New Zealand is set to announce its next monetary policy decision Wednesday, 3:00 am BST. RBNZ is not only expected to deliver a fifth rate hike in a row but also a second straight 50 basis point rate hike. This would push the cash rate to 2.00% - the highest level since mid-2019. However, this rate hike is largely priced-in and a hawkish guidance would be needed to provide more fuel for NZDUSD recovery. Market pricing sees cash rate at 3.25% by the end of the year but it does not mean RBNZ shares the same view.
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