EUROPEAN SESSION
In the European session, we don't have anything on the agenda other than the final Eurozone CPI report. The preliminary figures saw the headline CPI Y/Y rising to 1.9% vs 1.7% prior, and the Core CPI Y/Y to 2.4% vs 2.2% prior. Since it's the final data, the market reaction will likely be muted.
AMERICAN SESSION
In the American session, we have the US PPI report and the BoC and FOMC policy decisions. The US PPI Y/Y is expected at 3.0% vs 2.9% prior, while the Core PPI Y/Y is seen at 3.7% vs 3.6% prior. The data is not going to change anything at this point as the market is still focused on the US-Iran war and we have also the FOMC decision a few hours later.
The BoC is expected to keep interest rates unchanged at 2.25% keeping a cautious stance amid the geopolitical tensions and rising oil prices despite the softer economic data. The market is fully pricing in a rate hike by year-end but the central bank is unlikely to support such expectations.
The FOMC is expected to keep interest rates unchanged at 3.50-3.75%. We will also get the Summary of Economic Projections (SEP) at this meeting and the Dot Plot. Inflation and unemployment forecasts are likely to be revised upwards, while the growth forecasts might be downgraded. The Fed is also expected to keep projecting just one rate cut in 2026. Given the US-Iran war and the elevated energy prices, the central bank is likely to keep a "wait and see" approach.
