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ING’s Commodities Strategist Ewa Manthey notes that LME copper is trading near record highs, supported by supply tightness, US tariff-driven stockpiling and AI-related power demand. The market is already pricing US tariff risk, with the COMEX-LME spread around $400/t. ING expects a tight global copper balance into 2026, with the tariff outcome shaping spreads and inventory visibility.

Tariff scenarios drive COMEX-LME copper spread

"The US tariff decision on copper imports is weeks away, with the Commerce Secretary due to deliver a recommendation to President Donald Trump by 30 June. The market has already begun pricing the outcome. The COMEX-LME spread has widened to around $400/t, suggesting the market continues to price meaningful tariff risk into US-delivered refined copper."

"LME copper is trading near record highs, with prices up around 10% year-to-date and holding up well against a difficult macro backdrop. Strong US jobs data has reinforced expectations that the Federal Reserve will keep policy restrictive for longer, while renewed tensions involving Iran have weighed on broader risk sentiment."

"A confirmed 15% phased tariff from 1 January 2027 would likely increase the premium of COMEX over LME copper. In practice, both benchmarks would move higher. COMEX would be supported by stronger US import demand, while LME would also benefit as metal diverted away from the US tightens supply availability elsewhere."

"We forecast the global copper market to move into a deficit of around 35kt in 2026, reflecting mine supply losses across Indonesia, Chile, the DRC and Zambia, alongside disruptions to Middle Eastern sulphur flows and sustained end-use demand in electrification and grid infrastructure. The tariff outcome does not change that underlying market balance. However, it will determine how quickly the deficit becomes visible in exchange inventory data and how the price gap between COMEX and LME evolves."

"We see LME copper broadly supported at current levels through 2Q, before easing modestly into 3Q and 4Q as the initial tariff stockpiling impulse fades and macro headwinds persist. The tariff announcement itself represents near-term upside risk to our near-term forecast. A front-loaded 30% tariff would put further upside in play. Conversely, a delay or outright rejection of tariffs represents the clearest downside risk to our view over the second half of the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Societe Generale strategists note Mexico still appears steady even as conditions become more challenging. Inflation has cooled to 3.94% in May, while Banxico has signalled an end to its easing cycle, leading markets to price potential hikes. They highlight record exports to the US and Mexico’s strong United States-Mexico-Canada Agreement (USMCA) position, but warn about uncertainty over future USMCA arrangements.

Mexico steady but USMCA clouds outlook

"Mexico still looks steady, even if the playing field is getting a bit more challenging."

"Inflation has cooled to 3.94% in May, back below the 4% mark, but Banxico has already signalled the end of its easing cycle, prompting markets to price renewed hikes."

"Trade is clearly doing the heavy lifting, with exports to the US hitting a record $50.7bn in April, underlining Mexico’s strong position within the USMCA framework."

"That said, the outlook is clouded by uncertainty around the future of the USMCA, with the US leaning toward periodic reviews rather than a clean renewal."

"USD/MXN was capped below 17.50 barrier while USD/BRL rally stalled at 5.20."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Commerzbank’s Bernd Weidensteiner and Christoph Balz argue that Kevin Warsh’s first Federal Reserve meeting is unlikely to deliver an immediate rate cut, given elevated PCE inflation and a still‑solid labor market. They expect the Fed to drop its easing bias next week, then only begin a gradual cutting cycle around mid‑2027, constrained by inflation risks and political pressure.

Warsh unlikely to cut near term

"However, an interest rate cut is unlikely to be seriously on the table next week. This is because inflation risks have continued to rise since the last meeting in April. Based on the comprehensive inflation measure preferred by the Federal Reserve—the deflator of personal consumption expenditures (PCE) —prices in April were 3.8% higher than a year earlier."

"Since the inflation rate is well above the Fed’s 2% target and is actually moving further away from it, a rate cut would only be justified if the Fed were to completely miss its second goal of full employment. In fact, the labor market has recovered from the slump it experienced last fall. At that time, the unemployment rate had risen to 4.6%, prompting the Fed to cut rates three times."

"We expect the central bank to remove the “easing bias.” While Kevin Warsh will have no objection to an interest rate cut as the next step, he generally does not believe in signaling future interest rate moves. He could therefore agree to calls to eliminate the wording, even if he does not share the substantive arguments."

"Warsh won’t have a better chance of pushing through an interest rate cut until next year. By then, the inflation rate is expected to fall again, as the price-driving effects of tariffs and the higher energy costs resulting from the conflict in the Persian Gulf should begin to subside. In addition, Warsh expects that the introduction of artificial intelligence (AI) will significantly boost productivity, as was the case during the “New Economy” of the 1990s and early 2000s."

"We continue to expect that, due to inflation risks, calls for interest rate hikes will grow louder in the coming months, but that this will not become the prevailing view within the FOMC. If the situation in the Persian Gulf eases and oil prices—and thus the inflation rate—fall again, sentiment is likely to shift and the question of interest rate cuts will resurface. Starting around the middle of next year, the Fed will likely begin cutting interest rates, by 75 basis points through the end of 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Gold consolidates after Thursday's rebound but remains on track for a second straight week of losses.
• Traders await fresh updates on US-Iran negotiations after Trump said an agreement could be signed soon.
• Technically, XAU/USD remains bearish, with the RSI near 35 indicating subdued upside momentum.

Gold (XAU/USD) consolidates on Friday as traders await further developments on a potential US-Iran peace deal. At the time of writing, XAU/USD is trading flat around $4,200 after recovering from a nearly seven-month low of $4,023 touched the previous day.

US President Donald Trump said on Thursday that he had canceled planned military strikes on Iran and claimed a peace agreement could be signed as soon as this weekend.

Trump's statement lifted market sentiment, with Gold rallying more than 3% and retracing part of the losses recorded earlier this week, as the US Dollar (USD) and Oil prices lost ground.

Iran's Foreign Ministry spokesperson said the framework text is "nearly finalized," according to the Islamic Republic News Agency (IRNA). A memorandum of understanding (MoU) between the US and Iran could be signed as soon as Sunday in Geneva, Bloomberg reported, citing senior officials.

However, Bullion is struggling to extend the previous day's gains amid uncertainty over Tehran's final approval. The upside also appears limited after this week's US inflation data reinforced expectations that the Federal Reserve (Fed) may need to keep interest rates higher for longer. Higher borrowing costs tend to weigh on non-yielding assets such as Gold.

The Consumer Price Index (CPI) climbed to 4.2% YoY in May from 3.8% YoY in April, marking its highest level since April 2023. The Producer Price Index (PPI) rose 6.5% YoY from 5.7%, its strongest pace since November 2022.

Hawkish Fed expectations and lingering doubts over whether a US-Iran agreement is imminent also help limit losses in the Greenback, leaving the precious metal on track for a second straight weekly loss.

The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, trades around 99.75, holding modest intraday gains.

On the data front, the US economic calendar features the preliminary University of Michigan (UoM) Consumer Sentiment Index for June, due later in the American session.

Technical analysis: Bears stay in control as RSI signals weak momentum

XAU/USD remains in a bearish near-term bias as price holds below the 20-day Simple Moving Average (SMA) from the Bollinger Bands at roughly $4,425, leaving the recent bounce looking corrective within a broader downswing.

Momentum is weak on the daily chart. The Relative Strength Index (RSI) sits around 35, showing subdued upside momentum, while an elevated Average Directional Index (ADX) near 35 suggests the prevailing downtrend remains technically strong even as volatility compresses within the Bollinger envelope.

On the downside, initial support emerges near the lower Bollinger Band around $4,149, ahead of more substantial horizontal demand at $4,000, where buyers would be expected to defend a deeper pullback.

On the topside, a recovery would first face resistance at the Bollinger mid-line / 20-day SMA near $4,425, with a further barrier at the upper Bollinger Band near $4,701, which together define the key zone that bulls would need to reclaim to ease the current bearish tone.

(The technical analysis of this story was written with the help of an AI tool.)

Nomura’s Global FX Strategy team, including Dominic Bunning and Yusuke Miyairi, argues that a more hawkish ECB path versus the Bank of England should support the Euro against the Pound. They keep a long EUR/GBP stance and see narrowing front-end rate differentials and UK political-fiscal risks as catalysts for a move in EUR/GBP towards 0.90 over the coming months.

Long EUR/GBP on ECB-BoE divergence

"Hawkish ECB announcements today, as well as potential rate hikes in the future will be EUR positive, in our view. We like to express this via long EUR/GBP, with the GBP leg likely to face adverse pressure due to political fiscal risks."

"We think there is room for EUR to outperform many of its peers as the ECB shows a more hawkish reaction function to upside price pressures. We have maintained a long EUR/GBP trade over recent months, and while the pair has not moved significantly against us, it has also been an incredibly frustrating position to hold, failing to break out to the topside despite a number of risks to GBP (especially on the political and fiscal front). However, we think the clearer signs of monetary policy divergence will ultimately drag the pair higher."

"EUR/GBP has a consistent relationship with front-end rate spreads, and with our new view of a terminal ECB rate of 3.00% versus a BoE rate of 3.50% in 2027 (one hike this year, two cuts next year), a narrowing of the 2y rate differential to below 100bp from 140bp would support a move in EUR/GBP towards 0.90 (Figure 4). Positioning data are mixed but do not suggest many impediments to a move higher in the cross."

"Political and fiscal risks persist for the UK, of course, ahead of the by-election on 18 June which currently seems likely to see Andy Burnham return as an MP and challenge PM Keir Starmer for the top job. The resignation of Defence Secretary John Healey on 11 June further undermines Starmer, but also points to an underlying truth that the fiscal backdrop in the UK is exceedingly tight and will require spending cuts or tax increases. We would think Burnham will favour the latter, weighing on growth further."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• The Preliminary Michigan Consumer Sentiment Index is seen ticking up to 46 in June from 44.8 in May.
• Consumer confidence is expected to have remained near historic lows as higher prices pinch purchasing power.
• UoM Consumer Sentiment reading is likely to add concerns about the economic consequences of inflation.

The University of Michigan (UoM) will release the preliminary estimate of June’s Consumer Sentiment Index on Friday. The report, measuring consumers’ feelings about personal finances, business conditions, and purchasing plans, is expected to show that consumers’ confidence remains depressed, at levels only beaten by May’s all-time low.

Economic confidence among US consumers is expected to have edged up to 46.0 in June, as measured by the UoM Consumer Sentiment Index, only marginally above May’s record low of 44.8. These figures show the lowest confidence levels since records began in 1952, and a more pessimistic view than during the 1970s Oil crisis, the 2008 recession, or the COVID pandemic. 

Hopes for a brighter future are also poor. The UoM Consumer Expectations Index is also foreseen as consolidating near historic lows, despite an uptick to 44.3 from May’s 44.1 reading. 

Consumption is a key contributor to US economic activity, accounting for about 70% of the country’s Gross Domestic Product (GDP). In that sense, the Michigan Consumer Sentiment Index is considered a reliable forward-looking indicator of US economic trends, and its release tends to have a significant impact on the US Dollar (USD)

What to expect from June’s UoM Consumer Sentiment Index report?

June’s release is expected to provide further evidence that US consumers are struggling amid the higher cost of living. The war in Iran and the subsequent blockade of the Strait of Hormuz have boosted energy prices, pushing costs higher through a wide range of products and services.

If preliminary UoM Consumer Sentiment Index figures align with market consensus, they are likely to shift the focus to the economic consequences of out-of-control inflation and might dampen some of the enthusiasm triggered by the bright Nonfarm Payrolls (NFP) report and the strong services and manufacturing activity data released last week.

May’s survey already highlighted an increasing concern about the inflationary impact on personal finances, an issue that is unlikely to have improved during the last weeks: “The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month.”, said Joanne Hsu, director of the University of Michigan’s Surveys of consumers.

US Consumer Price Index (CPI) figures, released on Wednesday, endorse the view that US consumers are getting squeezed by inflation. Data from May revealed that prices accelerated to a 4.2% year-on-year pace, their highest level since April 2023, with energy prices jumping by a whopping 23.5% in the 12 months previous to May. 

When will the UoM Consumer Sentiment Index be released, and how could it affect the US Dollar?

The University of Michigan will release its Consumer Sentiment Index, together with the Consumer Inflation Expectations survey, on Friday at 14:00 GMT. The market consensus hints at a minor improvement from the previous reading, yet at levels reflecting a deeply negative sentiment. The risk is skewed to the downside for the US Dollar.

The Greenback has shown a solid bullish trend since early May, as investors seek safe assets amid uncertainty in the Middle East conflict. Beyond that, strong US data, namely a significant improvement in the labour market, has boosted hopes that the Federal Reserve (Fed) will be forced to raise interest rates before the end of the year, providing additional support to the USD.

The US Dollar Index (DXY), which measures the value of the USD against a basket of peers, has rallied more than 2% as tensions escalated in the Middle East, casting clouds over the US-Iran peace process.

Guillermo Alcala, FX Analyst at FXStreet, sees limited chances of a significant US Dollar reversal until the situation in the Middle East improves. ”The USD is likely to weaken if consumer confidence figures meet market expectations. Dips, however, are likely to find buyers with risk appetite subdued amid Iran’s conflict. Previous highs at the 99.50 area or the June 4 and 5 lows near 99.15 are expected to hold bearish attempts.”

On the upside, Alcalá sees resistance at the 100.30 and 100.65 areas as the main hurdles for bulls: “Upside attempts are likely to be tested ahead of the April 6 high near 100.30, which, so far, is closing the path to the year-to-date high, in the 100.65 area.”

• EUR/USD remains capped below 1.1590 after bouncing from 1.1500 lows.
• Optimism about a US-Iran peace deal and a hawkish ECB are supporting the pair.
• Euro bulls struggle to return above the bottom of late-May's trading range.

The Euro (EUR) has given away previous daily gains against the US Dollar (USD) and is trading practically flat, at 1.1575 at the time of writing. The EUR/USD pair has bounced from two-month lows at 1.1500 but is failing to find follow-through above the floor of the previous three weeks' trading range, at the 1.1580-1.1590 area

A moderate risk appetite keeps holding the Euro above previous lows, with market sentiment buoyed by news reporting advances in the US-Iran peace process. US President Donald Trump said on Thursday that the final deal could be signed in the coming days, although Tehran has been more cautious, warning that the final decision has not been taken yet.

The ECB delivered a rather hawkish hike

On Thursday, the European Central Bank (ECB) hiked interest rates by 0.25% for the first time in nearly three years and revised its inflation forecasts for the next few years. This has been seen as a sign that further tightening is on the table and has provided additional support to the Euro.

In the US, Producer Price Index (PPI) figures were mixed. Headline inflation accelerated to a 6.5% yearly rate, its fastest level in more than three years, while the core PPI remained steady at 4.9% against expectations. Later on the day, the US Michigan Consumer Sentiment Index is expected to show that the high cost of living is keeping consumers’ morale near historic lows, and is highly unlikely to provide any significant support to the USD

Technical Analysis: Bulls remain capped at a previous support area

EUR/USD trades at 1.1574, holding a modest bullish bias in the near-term, yet with the late May-early April trading range capping gains. Momentum indicators in the 4-hour chart remain moderately bullish with the Relative Strength Index (RSI) hovering in the mid-50s and Moving Average Convergence Divergence (MACD) at marginally positive levels..

Bulls need to break and confirm above the mentioned resistance at the 1.1580-1.1590 area, which held bears several times over the previous three weeks. If those levels are breached, the focus will shift to the June 4 and 5 highs, near 1.1645, and the late-May high, at 1.1685.

Pullbacks have remained contained above 1.1555 so far on Friday, keeping two-month lows in the 1.1500 area at a relatively safe distance. An unlikely move below that level brings the March 19 and 30 lows, around 1.1445, into focus.

(The technical analysis of this story was written with the help of an AI tool.)

MUFG analysts Lin Li, Michael Wan, Lloyd Chan and Khang Sek Lee argue that firmer US inflation and resilient labour markets underpin a higher-for-longer global rates backdrop, supporting the US Dollar. They expect the Federal Reserve to stay on hold at the upcoming FOMC, with new Chair Kevin Warsh’s guidance seen as key for USD direction and Asian currencies.

Fed on hold but guidance crucial

"The week ahead is a pivotal one for FX markets, with a flurry of central bank meetings across the US, Japan, and key Asian economies set to reinforce a “higher-for-longer” global rates backdrop."

"The combination of firmer US inflation and resilient labour market conditions should support the US dollar, while driving greater differentiation within Asia FX amid geopolitical risks in the Middle East."

"While US retail gasoline prices have eased modestly, they remain elevated relative to pre-conflict levels, continuing to feed through into inflation."

"With US headline CPI rising above 4%yoy and 1-year inflation expectations firming further, the risk of second-round effects is increasing, limiting the Fed’s scope to ease."

"The upcoming FOMC meeting will be critical, not for policy change - we expect the Fed to remain on hold - but for forward guidance."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)