Markets are temporarily catching their breath following a sell-off triggered by a combination of unfavorable geopolitical signals and a higher-than-expected US CPI inflation reading (4.2% YoY), which significantly pushes back the prospect of policy easing by the Federal Reserve. During today’s session, capital attention will shift to Europe and data from the US economy. The event of the day will be the European Central Bank’s interest rate decision. Recent lower-than-expected inflation readings in key Eurozone economies (2.6% in Germany and 2.4% in France) along with concerns over economic activity could give the ECB room to leave rates unchanged. On the other hand, the central bank’s primary concern—persistently elevated energy prices—will significantly impact new forecasts, potentially motivating a “precautionary hike.” In the afternoon, investors will digest data on US producer price inflation (PPI) and the labor market situation, which will undoubtedly generate heightened volatility across euro currency pairs and major stock indices. Key Releases from the Asian Session:

• China published M2 money supply data for May, which came in at 8.5% year-on-year, marking a slight decline compared to the previous month.
• The May reading for new bank loans in China was also released (500 billion CNY), indicating a rebound in liquidity after a very weak April.

Macroeconomic Calendar (all times CET):

• 14:15 Eurozone – ECB Deposit Facility Rate decision. Consensus: 2.25%. Previous reading: 2.00%.
• 14:30 US – PPI Inflation YoY. Consensus: 6.4%. Previous reading: 6.0%.
• 14:30 US – Core PPI Inflation YoY. Consensus: 5.4%. Previous reading: 5.2%.
• 14:30 US – PPI Inflation MoM. Consensus: 0.7%. Previous reading: 1.4%.
• 14:30 US – Initial Jobless Claims. Consensus: 220k. Previous reading: 225k.
• 14:45 Eurozone – ECB Press Conference.
• 16:30 US – EIA Natural Gas Storage weekly change. Consensus: 101 bn. Previous reading: 95 bn.

Key Corporate Earnings Releases:

• Wizz Air (pre-market)
• Adobe (after-hours)
• RH (after-hours)

📊 3 Markets to Watch Today:

• EUR/USD – The market with the highest exposure to the key events of today’s session. A potential decision by the European Central Bank regarding the highly anticipated rate hike to 2.25%, combined with hawkish producer price inflation (PPI) readings from the United States, will set the primary trend in the forex market for the coming days.
• Crude Oil (Brent) – A steadily rising geopolitical risk premium due to overnight US airstrikes in Iran. An additional factor shaping volatility in this market will be the release of the OPEC monthly report in the background, outlining updated forecasts for global oil demand and supply.
• Nasdaq 100 – The tech index is under heavy pressure following yesterday’s higher US CPI inflation reading and a nervous market reaction to Oracle’s report. Today, investors will be positioning themselves ahead of the crucial evening financial results release from software giant Adobe.

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