'I love the inflation'
Tehran announced the need for an emergency revision of the entire negotiating track with Washington after another series of overnight armed clashes in the region. In response, US President Donald Trump openly confirmed Washington's intention to return to full-scale combat operations and announced the imminent start of an offensive. The White House chief said he was close to signing an order to carry out massive strikes on key elements of Iran's civilian infrastructure, including bridges and power plants. Trump added that the air campaign would continue despite the recent shootdown of a US Apache helicopter, asserting the US has every right to act. At the same time, the president made a provocative remark that he "loves the inflation," despite consumer inflation rising to 4.2% (CPI). He attributed the sharp drop in US oil prices to the successful seizure of Iranian cargo, claiming 22 tankers were intercepted in a single night. Energy Secretary Wright was quick to publicly disavow that claim, telling the press his department had no information supporting any forced seizure of Middle Eastern oil by US forces.Pentagon chief promises airstrikes
Defense Secretary Pete Hegseth officially announced the imminent launch of a new large-scale series of air raids against the Islamic Republic. Hegseth warned that US forces would deliver crushing blows to key military and strategic nodes on Iranian soil during the night of June 11. According to the secretary, the Defense Department intends to establish an indisputable coercive posture that will force Tehran to sign the geopolitical deal President Trump seeks.Hegseth stressed the attacks planned for Wednesday evening would be powerful, conspicuous and demonstrative, and that US air operations could continue through to Friday. His ultimatum followed President Trump's sharp rebuke to Iranian authorities for deliberately and excessively delaying the diplomatic process and his promise of severe military retribution.Kevin Warsh turns hawkish
The newly appointed head of the US central bank, Kevin Warsh, faces a paradoxical macroeconomic reality. Despite his reputation as a strict monetarist, the White House backed his candidacy in the hope he would deliver a sharp easing in borrowing costs — yet current metrics point to the opposite scenario. Rather than cooling, the national economy shows strong acceleration:
- Atlanta Fed estimates GDP is growing around 3%
- equity markets are charging to historic highs supported by fiscal stimulus
- unemployment sits at a comfortable 4.3%
The primary problem remains inflation, which has picked up due to higher oil prices. Warsh's prior rhetoric — that total digitalization and AI adoption would naturally suppress price growth — is losing traction in expert circles. A large surge of investment is adding to price pressure, making near-term monetary easing unlikely. Attempts to rely on balance sheet reduction have been judged by analysts as insufficient to tame inflation.
Goldman Sachs revises forecasts
Analysts at Goldman Sachs have radically reassessed their projections for the Fed funds path, effectively removing the probability of rate cuts this year. The bank now pushes the first rounds of easing out to June and December 2027, having previously expected the process to start in late 2026. The decision followed shocking May US labor market data that stunned markets: instead of the modest consensus of 88k jobs, US employers added 172k positions, materially outperforming April's subdued print.
Against that backdrop, the unemployment rate showed notable stability, prompting Goldman Sachs to pre-emptively lower its year-end unemployment forecast from 4.6% to 4.4%. Fresh macro releases have triggered tectonic shifts in investor sentiment, forcing the bond market to price in a 25bp hike by year-end. Strong payrolls sparked heavy selling in government bonds and sent the Nasdaq 100 down by more than 5%.
On this basis, investors expect next week's FOMC meeting (June 16–17) under chair Kevin Warsh to abandon any language hinting at near-term easing. Analysts anticipate an updated, more hawkish policy narrative on inflation and rates. That stance would be consistent with the fresh May CPI data.
Hike odds double on AI boom
David Mericle, chief US economist at Goldman Sachs, stated that the current state of the domestic labor market eliminates the need for Fed easing. In response, the bank sharply downgraded its probabilities:
- confidence in the baseline scenario fell to 30%
- the risk of a resumed rate-hike cycle jumped to 20%
Goldman splits the remaining probability roughly evenly between a no-change outcome and a recessionary scenario. The main drivers entrenching a high-rate environment are:
- new import tariffs
- the Middle East crisis
- massive AI investments
Goldman Sachs projects core PCE — recorded at 3.3% in April — will remain above the 3% threshold through year-end and return toward the 2% target only next year as wage-growth momentum and rental pressures cool.
President Trump, meanwhile, publicly criticized potential Fed tightening. In an interview on NBC's Meet the Press, he flatly rejected the logic that strong economic data should trigger rate increases. Trump lamented that strong macro prints induce market panic over monetary policy and demanded immediate rate cuts. He argued that America's industrial strength can contain inflation, while expensive borrowing would complicate service of the sovereign debt and block key budget priorities, including major defence and industrial investments. Despite formal acknowledgements of Kevin Warsh's independence, the White House's increasingly frequent attacks reflect deep administration anxiety over the Fed's hawkish pivot.
Dollar rockets higher
Analysts at BMO Capital Markets call buying the US dollar the most advantageous tactic in an environment of entrenched inflation and high borrowing costs. The powerful momentum behind the greenback came from unexpectedly strong May labor market data, which showed the best dynamics in months. BMO strategists argue it is premature to price in a near-term end to the US-Iran standoff. Even a hypothetical fall in the oil price would not instantly relieve inflationary pressure because secondary effects are already propagating through the economy.
Fundamental market relationships now strongly favor a persistently tight policy stance and dollar dominance. Added support comes from the overall resilience of the US macroeconomy. Accordingly, BMO is running aggressive long dollar positions vs. the euro, sterling, yen, as well as the Australian and Canadian dollars. Markets reasonably expect the economic divergence and expensive money to continue channeling liquidity into US assets — a view Bloomberg has corroborated.
BofA sounds alarm
Bank of America analysts have flagged worrying technical signals in Wall Street's tech segment, warning large capital holders of the risk of a material drawdown and urging urgent portfolio protection. Despite local attempts by the Nasdaq 100 to rebound from Friday's lows, the index remains precariously positioned. BofA strategists note that the extended rally — which pushed the index above the psychological 30,000 mark — looks overstretched and disconnected from fundamentals. The RSI entered deep overbought territory and has since rolled over, producing a classic weekly bearish-engulfing pattern on the charts.
The recent advance has been driven largely by aggressive buying of semiconductor giants. Quant models point to critical overheating in that cohort, which raises the risk of a volatility spike. A case in point is the VanEck Semiconductor ETF: its RSI has eased from extreme readings, and historical precedent shows such unwindings in the chip industry often precede substantive corrections. Bank of America concludes that the current risk-reward profile is clearly skewed against buyers.
June 11
June 11, 02:01 / UK / *** / RICS house-price balance for May / prev.: -25% / actual: -34% / consensus: -31% / GBP/USD – up
The RICS house-price balance in the UK fell in May to its weakest level in years amid a pronounced regional slowdown and Bank of England warnings that interest rates may need to be raised to fight oil-driven inflation. Despite the sharp drop in the current indicator, short-term price expectations among market participants have begun to stabilize. The May report projects a partial moderation in the downturn to -31%. If the print matches that forecast, sterling should strengthen.
June 11, 04:00 / Australia / *** / Consumer inflation expectations (leading indicator) for June / prev.: 5.9% / actual: 5.6% / consensus: 6.5% / AUD/USD – up
Australian consumer inflation expectations eased to 5.6% in May, retreating from multi-year highs, although concerns persist over commodity-driven price pressures amid the Middle East conflict and the RBA's hawkish stance. The leading June survey anticipates a sharp pickup to 6.5%. If realized, that would point to rising pro-inflationary risks and support the Australian dollar.
June 11, 15:15, 15:45 / Eurozone / *** / ECB rate decision, press conference / prev.: 2.15% / actual: 2.15% / consensus: 2.40% / EUR/USD – up
The ECB meeting is widely expected to lift the policy rate to 2.40% in response to accelerating inflation following logistical and energy shocks. All eyes will be on Christine Lagarde's press conference. Her rhetoric will be key to gauging the bank's readiness for further tightening. A print in line with consensus would lead to a stronger euro.
June 11, 15:30 / Germany / ** / Building permits, April (m/m) / prev.: -7.8% / actual: 10.3% / consensus: -3.5% / EUR/USD – down
Total building permits previously showed a strong rebound, rising 10.3% driven by institutional and industrial projects that fully offset weakness in residential construction. The April consensus expects the indicator to return to negative territory at -3.5%. Confirmation of that forecast would signal renewed cooling in construction investment and weigh on the euro.
June 11, 15:30 / US / ** / Initial jobless claims (weekly) / prev.: 212k / actual: 225k / consensus: 219k / USDX (6-currency dollar index) – up
Initial claims for unemployment benefits rose to 225k at the end of May, a year-to-date high. Despite the pickup in new claims, continuing claims declined, keeping the overall labor market picture within long-run averages. The weekly consensus expects claims to fall to 219k. If the actual matches expectations, this would confirm labor market resilience and support the US dollar.
June 11, 15:30 / US / *** / Producer price inflation for May (y/y) / prev.: 4.3% / actual: 6.0% / consensus: 6.4% / USDX (6-currency dollar index) – up
Producer prices accelerated sharply to 6.0% y/y in April, the highest level in years. The wholesale price surge was driven by:
- an energy shock linked to the Iran conflict
- higher warehousing and transportation costs
In the May report, analysts forecast a rise to 6.4%. If realized, this would signal further cost pressures in industry and be dollar-positive.
June 12
June 12, 07:30 / Japan / ** / Industrial production, April / prev.: 0.4% / actual: 2.4% / consensus: 2.3% / USD/JPY – up
Industrial production in Japan showed a solid expansion in the prior period, rising 2.4% year-on-year. The local pickup in industrial activity still remains below long-run historical averages. The April report is expected to show a slight moderation to 2.3%. A print in line with consensus would confirm a stabilization of the industrial momentum and weigh on the yen.
June 12, 09:00 / Germany / ** / Consumer inflation, May (y/y) / prev.: 2.7% / actual: 2.9% / consensus: 2.6% / EUR/USD – down
Headline consumer inflation in Germany is expected to ease to 2.6% year-on-year in May, retreating from a multi-month peak as food and energy prices moderate. At the same time, services inflation has resumed, keeping the overall index above the ECB's target. A confirmed 2.6% print would signal a consolidation of current price dynamics and likely weigh on the euro.
June 12, 09:00 / UK / *** / GDP growth, April (y/y) / prev.: 1.0% / actual: 1.2% / consensus: 1.3% / GBP/USD – up
UK economic growth accelerated to 1.2% year-on-year in March, marking the strongest pace in three quarters. April GDP is forecast to rise to 1.3%. A print matching consensus would confirm the resilience of the domestic recovery and support sterling.
June 12, 09:00 / UK / *** / Industrial production, April (y/y) / prev.: -0.5% / actual: 0% / consensus: -0.1% / GBP/USD – down
UK industrial production showed near-zero year-on-year dynamics in March, recovering from prior weakness but falling short of earlier market estimates. Output in the industrial sector remains well below long-run averages. The April consensus expects a slight dip to -0.1%. Confirmation would signal a renewed cooling in industrial investment and weigh on the pound.
June 12, 17:00 / US / *** / University of Michigan consumer sentiment index, June (lead) / prev.: 49.8 / actual: 44.8 / consensus: 46.0 / USDX (6-currency index) – up
The University of Michigan consumer sentiment index plunged to a record low of 44.8 in May amid a sharp rise in living costs and gasoline prices. The largest drop in confidence was recorded among the most economically vulnerable households, accompanied by worsening long-term inflation expectations. The leading June release is expected to show a partial recovery to 46.0. If realized, that would indicate a local improvement in household sentiment and support the dollar.
June 12, 17:00 / US / ** / Preliminary consumer expectations index, June (lead) / prev.: 48.1 / actual: 44.1 / consensus: 44.3 / USDX (6-currency index) – up
The US consumer expectations index fell to a historic low of 44.1 in May, extending the negative trend of recent months. Current household sentiment about the economic outlook remains well below long-run averages. The June lead estimate is expected to tick up slightly to 44.3. Aconfirmed rise would signal a pause in the slide of consumer confidence and back the dollar up.
June 11, 12:00 / Eurozone / Speech by Sharon Donnery, ECB Supervisory Board / EUR/USD
June 11, 15:45 / Eurozone / Speech by Christine Lagarde, President of the European Central Bank / EUR/USD
June 12, 17:30 / Eurozone / Speech by Joachim Nagel, ECB Governing Council / EUR/USD
Speeches by senior central bank officials are also on the agenda this week. Their remarks typically move FX markets because they can signal the regulators' next steps on policy rates.
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