Samantha Luan

A jump in US jobless claims sent the dollar lower across the board yesterday, confirming how FX markets have an extremely elevated sensitivity to data in this moment.

We see two key themes driving FX markets near term. The first is central banks continuing to battle inflation, yield curves staying inverted, and the dollar continuing to hold gains.

The global forex markets are in a state of relative tranquillity today, as the dust begins to settle following two central bank surprises.

We expect a hawkish hold by the Bank of Canada today, but pressure on policymakers to hike has risen and it's admittedly rather a close call. We don't think it's a make-or-break event for CAD – but we should keep an eye on the implications of a hike for the broader market and the dollar.

Australian Dollar is staying generally firm in Asian session today, as supported by hawkish comments from RBA Governor Philip Lowe. More tightening could still be underway after yesterday's surprised rate hike.

The Reserve Bank of Australia surprised with a 25bp hike, citing upside risks to inflation and the trade-off that delaying rate hikes could be costly.

Australian Dollar surges broadly after surprised RBA rate hike.

Despite the very strong headline U.S. May payroll figure, rising unemployment and declining wage inflation are keeping markets from fully pricing in a June Fed hike (we expect a hold). Barring a big ISM services surprise today, the lack of other key inputs before next week's CPI could keep the dollar capped. The RBA decision tomorrow is also a 50-50 decision.

In a remarkable rally during Asian session, Japanese stocks surged sharply, with Nikkei index smashing through the 32k mark, reaching a high not seen in 33 years.

A look at the day ahead in U.S. and global markets from Mike Dolan.