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* President Trump sees disabling Iran nuclear site as necessary, but doubts over ‘bunker buster’ bomb

* BoE holds rates steady, but a summer cut could still be on the cards

* Fed’s “wait-and-see” approach keep it on collision course with Trump

* Oil breaks higher to new cycle highs, US stock futures in the red

* US markets were closed on Thursday for the Juneteenth holiday

FX: USD enjoyed a quieter day with US markets on holiday. Prices printed a tiny range with a very mild bid through the day on risk aversion as oil made fresh cycle highs. Safe haven demand and rising crude prices have helped the greenback this week. Trump said it could take two weeks to make a decision on whether to join Israel in its attacks on Iran. The Fed was mildly hawkish at the margin on the spread of dots while stagflation got a step closer in the economic projections.  It seems that more and more on Wall Street, analysts expect a delayed Fed rate cut but a bigger one when it does come.

EUR treaded water, essentially due to the US holiday and thinner liquidity. We are mindful of Middle East events and an oil price spike which would hurt the euro. But these events are typically localised and only temporary drivers of FX unless they trigger long-lasting effects on commodity prices. The SNB cuts rates to 0% due to negative inflation and very low inflation forecasts. A return to negative is seen as likely but probably won’t prompt intervention if there is a weaker swissie, for fear of attracting the wrath of the US administration.

GBP held steady around the previous cycle high at 1.3434 as it found support above the 50-day SMA as well.  The BoE kept rates unchanged, but we got a dovish 6-3 vote split, with Deputy Governor Ramsden joining Dhingra and Taylor. A quarterly pace of rate cuts still appears probable, even in the face of recent weak labour market data. Rate cut bets didn’t change too much with 49bps priced in for the rest of 2025 and around a 60% chance of an August reduction.

USD/JPY traded north to new three-week highs with little changed this week between relative BoJ and Fed central bank policy.  Interestingly, consensus probably sees the BoJ as turning more hawkish while the Fed’s more neutral stance is expected to bring policy easing in the medium-term.

AUD underperformed as jobs data disappointed, printing -2.5k in May versus +20k consensus estimate. That said, the participation rate ticked lower which suggests the labour market remains in relatively decent shape. The 200-day SMA sits at 0.6428, with the 50-day SMA crossing above it at 0.6434. CAD softened for a third straight day with the major bulls eyeing up the 50-day SMA at 1.3804.

US stocks: US stock markets were closed for Juneteenth.

Asian stocks: Futures are mixed. Asian markets were muted with eyes on the Middle East and the FOMC meeting. The ASX 200 came off highs after soft jobs data but was helped by gold miners. The Nikkei 225 sold off with a trade deal still proving rather elusive. The Hang Seng and Shanghai Comp followed the broader trend, drifting lower on a lack of fresh policy signals and ongoing trade worries.

Gold printed a doji in quiet trade. Other precious metals are grabbing the headlines like platinum. Year-to-date gains extended to 45%, with prices reaching an 11-year high after breaking above the 2021 high at $1,340. Prices have surged higher since late May after reports of tightening market conditions and increased investor demand amid a tired-looking gold market. That has resulted in the break of a 17-year downtrend.

Day Ahead – Japan CPI, UK Retail Sales

Japan May nationwide inflation is expected to print at 3.5%, driven by broad-based service price gains. Tokyo CPI has been hot in recent months though markets currently show minimal pricing for a rate hike through this year after the recent BoJ push back.

UK retail sales are forecast to pull back after a strong start to the year. The headline has surprised in almost every month so far, but despite the warmer weather, households may rein in their spending.

Chart of the Day – Dow stuck below 200-day SMA

The Dow Jones has underperformed the broader S&P 500 benchmark and the Nasdaq since the April Liberation Day lows. Tech has led the gainers, and the Dow is now struggling under the 200-day SMA at 42,518. This has capped the upside more or less through May and June with next support at the major Fib retrace level (61.8%) of this year’s decline at 41,829. Lose this and the 50-day SMA is below at 41,368. The initial upside target for bulls is last weeks’ top at 43,115.