Juneteenth Holiday US Market Wrap: Risk sentiment sours as Trump's next move awaits

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  SNAPSHOT: Equity futures down, Treasury futures up, Crude up, Dollar up.


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  REAR VIEW: CBS reports suggest Trump is warming up to the idea of taking out Iran's Fordow nuclear facility; Iran held direct talks with the US, and will only turn to talks if Israel halts attacks; SNB cuts and BoE holds, as expected, Norges Bank unexpectedly cuts; Aussie employment data surprisingly falls; BCB surprises with 25bps hike.


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  COMING UP: Holiday: On Thursday 19th June, on account of the Juneteenth Holiday, the Desk will shut at 18:00BST/13:00EDT and re-open the same day for the beginning of Asia-Pac coverage at 22:00BST/17:00EDT. Data: Japanese CPI, UK PSNB, Retail sales, US Philly Fed Business Index, Leading Index Change, Canadian Producer Prices & Retail sales, EU Consumer Confidence Events: Quad witching, Chinese LPRs, Japanese MOF Bond Meeting & Minutes, Iranian Foreign Minister Araghchi meets with European Ministers Speakers: ECB Governing Council Macroprudential Forum, BoJ's Ueda Holiday: Sweden, Finland, New Zealand.

MARKET WRAP: Amid the closure of US cash stocks/bonds, equity futures saw losses while bonds saw marginal upticks as risk appetite was pulled back. The move comes amid US President Trump receiving another military intelligence briefing, with the key focus on whether Trump chooses diplomacy or military action. Reports continue to suggest the latter is the likely option, namely Bloomberg noting the US eyes this weekend as a possibility for an Iran attack, while WSJ reported Trump has reportedly privately approved attack plans for Iran on Tuesday but has withheld the final order. Trump has since rejected the WSJ report. Additionally, CBS reported Trump has been briefed on the pros/cons of bombing Fordow and is of the mindset that disabling is necessary because of the risk of weapons being produced in a relatively short period of time. The subdued risk sentiment was accompanied by a ~USD 1.70/bbl rise in crude prices, with participants tentative ahead of a possible move from the US on Iran. One positive that may be drawn is that Iran held direct talks with the US amid intensifying conflict with Israel, and a regional diplomat with ties to Tehran said that the Iranian Foreign Minister told US Envoy Witkoff that Tehran "could show flexibility in the nuclear issue" if Washington pressured Israel to end the war. Moreover, Britain, France and Germany are to hold talks with Iran’s foreign minister on Friday, in a last-ditch effort to avert an escalation of conflict in the Middle East and a possible US intervention, according to FT. In FX, the Dollar caught a bid, thanks to elevated geopolitical tensions, putting DXY above the 99 handle, while Antipodeans lagged amid broader risk sentiment. The day saw many EU central bank rate decisions, with a recap below.

CENTRAL BANKS

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  BOE: BoE held rates at 4.25%, as expected, in a 6-3 vote (exp. 7-2), with Dhingra, Taylor and Ramsden all voting for lower rates and the bank retaining 'gradual, careful' language. Click for full details. Post decision, Governor Bailey says the statement that we expect rates to move gradually downwards is not a prediction for August.


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  NORGES BANK: Norges Bank cut by 25bps to 4.25% (prev. 4.50%), in an unexpected decision, and noted "The economic outlook is uncertain, but if the economy evolves broadly as currently projected, the policy rate will be reduced further in the course of 2025." In terms of forecasts, Q3-2025 4.21% (prev. 4.38%), Q4-2025 3.98% (prev. 4.21%), Q1-2026 3.81% (prev. 3.99%), Q2-2026 3.62% (prev. 3.77%). Click for full details. In the press conference, Bache said the central bank plans one or two more rate cuts this year; do not expect a significant drop in rates going forward.


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  SNB: SNB cut its policy rate by 25bps to 0.00%, as expected, and reiterated it "remains willing to be active in the foreign exchange market as necessary". Click for full details.. In the press conference, SNB Chairman Schlegel said do not take decision on negative rates lightly, and can never exclude any measure on negative rates. "Interest rate differential is important; if necessary, are ready to intervene in FX markets, that is still true".


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  CBRT: CBRT Weekly Repo Rate held at 46.0%, as expected, although the O/N Lending rate unexpectedly held at 49.0%.

To see the European Market Wrap, please click here.

19 Jun 2025 - 18:10- ForexGeopolitical- Source: Newsquawk