GLOBAL WEEK AHEAD – RBA CUT, G7 MEETS, FED CHORUS TEST DOLLAR’S LEAD
RBA’s Inflection Tuesday
The Reserve Bank of Australia (RBA) kicks the week off with what is widely expected to be its second 25-bp rate cut of 2025, trimming the cash rate to 3.85%. A Reuters poll finds 27 of 32 economists leaning that way, with a clutch even flagging two more quarter-point steps by year-end as core inflation cools and global risks climb. Markets are already priced for a cut, so the sensitivity sits in guidance. If Governor Bullock hints at another move as soon as July, AUD/USD could dive through 0.6350 and accelerate the forming rounding-top pattern. No follow-up signal, by contrast, lets carry investors fade shorts into 0.6500/15 resistance.
PMI Pulse: Tuesday–Thursday
A barrage of flash PMIs (US, eurozone, UK, Japan) will reveal whether April’s soft patch was a blip or a trend. Traders should focus on price-paid components: upticks will re-ignite the “higher-for-longer” narrative and cement the dollar’s floor just under DXY = 102. Conversely, another slide—especially in the eurozone’s services index—would make the ECB’s June cut path look tame and slam EUR/USD toward its lower Bollinger band at 1.1095.
Fed Speakers: Twelve Voices, One Message?
At least a dozen Fed officials span the tape from Monday through Friday, capped by two appearances from Vice-Chair Williams. Expect the median tone to repeat “data-dependent patience,” but watch the extremes: if Daly (dove) doubles down on shelter-led disinflation while Bostic (hawk) flags sticky wages, front-end yields could gyrate 15–20 bp intraday. The options grid shows implied one-week USD/JPY vol already inching above 11%, a reminder that rhetoric—not dots—is driving gamma.
G7 Finance Chiefs – Currency Language Under Microscope
The May 20–22 G7 in Canada lands just days after Moody’s downgraded the United States. Treasury’s Bessent is expected to emphasize “imbalances” rather than a weaker dollar, but any jointly-worded reference to exchange-rate volatility would put traders on intervention alert—especially with USD/JPY flirting with the Ichimoku cloud base at 146.45.
FX Map
- Dollar index (DXY): Firm into week’s open; a close above 102.40 triggers a double-bottom target near 103.40.
- EUR/USD: Bearish momentum; watch 1.1070/90 as stop-loss terrain for trend followers.
- GBP/USD: CPI/PPI on Wednesday loom large; another core-CPI overshoot would revive BoE pushback against last week’s rate cut and propel sterling through 1.3360.
- AUD/USD: RBA guidance and iron-ore prices remain the twin engines; break of 0.6350 unlocks 0.6150 thin-cloud support.
- USD/JPY: Yield differentials still king; a daily close above 146.45 invites tests of May-high 147.67 before any repatriation flows bite.
Rates & Commodities Quick Glance
The U.S. 2s–10s curve (≈ +47 bp) flattened last week; additional compression below +40 bp would flag growth angst rather than mere positioning. Crude’s 1.3% bounce failed at the 55-DMA; supply headlines out of the UAE investment plan are a wild card. Gold’s 1.37% slide mirrors real-rate resilience; if PMIs surprise lower, watch for a bounce toward $2,400/oz despite the firmer dollar.
Corporate Snapshot: Buffett’s Baton Pass
Berkshire Hathaway confirmed that Warren Buffett will leave the CEO post on Dec 31, 2025, ceding the stage to Vice-Chair Greg Abel. Buffett, 94, will remain chairman but plans to sit in the audience at the 2026 annual meeting, ending a six-decade tradition of marathon Q&As. Succession removes a key uncertainty premium for Berkshire stock but also shifts the conglomerate closer to conventional capital-allocation norms. Traders should watch the spread between Berkshire’s A-shares and the S&P 500 for clues on whether Abel’s first moves (likely smaller buybacks, more M&A) re-price the “Buffett multiple.”
