Morning Wrap (19.06.2025)

U.S. financial markets closed for Juneteenth holiday. Financial markets in the U.S., including the NYSE, Nasdaq, and the bond market, are closed today in observance of Juneteenth. Despite the holiday, geopolitical tensions may still affect investor sentiment. Markets are focused on the potential for U.S. intervention in the Middle East.

Multiple sources suggest that the U.S. is preparing for a possible military strike on Iran as early as this weekend, with potential targets including the heavily fortified Fordow nuclear complex.

Trump has reportedly approved the plans but is holding off on a final decision, waiting for signs of de-escalation from Iran. A shortened White House meeting took place, but troop movements suggest operational readiness.

The Israeli army issued evacuation warnings near the Arak nuclear complex, calling on civilians and workers to leave the area within a 2-kilometer radius.

This is the first such advisory outside of Tehran and suggests coordinated preparation between allies.

The U.S. dollar strengthened against major currencies, including the EUR, JPY, GBP, and AUD. Futures on U.S. stock indices initially fell but later recovered part of the losses.

Goldman Sachs estimates that the current Brent crude price (around $76–77 per barrel) includes a $10 geopolitical risk premium. While their base case assumes a drop to $60 per barrel by Q4, they warn that a U.S.–Iran conflict could push prices above $90. More severe disruptions could drive prices even higher.

New Zealand’s GDP grew by 0.8% quarter-over-quarter in Q1, beating forecasts and emerging from technical recession. The year-over-year figure remained negative (-0.7%), but was better than expected, driven largely by strong exports. Despite the positive data, the NZD showed little movement.

In May, Australia lost 2,500 jobs, while a 25,000 job gain had been expected. However, full-time employment rose significantly, with losses confined to temporary jobs, which softened the market reaction. The unemployment rate remained steady at 4.1%. This report is unlikely to prevent the RBA from cutting rates in July, and markets continue to price in a high probability of a cut.

The Swiss National Bank (SNB) is expected to cut interest rates by 25 basis points today to counter deflation.

Meanwhile, the Bank of England (BoE) will likely keep rates unchanged, though the voting split may offer clues about future monetary policy direction.

These decisions will close out a busy week for central banks in Europe.