What are the main events for today?

In the European session, the only highlight is the German IFO, which is correlated with the German PMIs so it’s unlikely to be market-moving. It definitely won’t change anything in terms of interest rates expectations.

In the American session, we have the Canadian CPI and the US Consumer Confidence. The Canadian Trimmed Mean CPI, which is what the
BoC is most focused on, bottomed around September 2024 and has been on a
steady rise since then. In the last release, the data jumped to 3.1%
Y/Y which is outside the BoC’s 1-3% target band (the mid-point is the
target).

The consensus sees the Trimmed Mean Y/Y at 3.0% vs 3.1% the prior month. The market is pricing 32 bps of
easing by year-end, so another 25 bps rate cut is fully priced
in. Nonetheless, the central bank will likely remain on the sidelines
for much longer if inflation continues to run this high, and that will
lead to a hawkish repricing in market’s expectation.

The US Consumer Confidence is expected at 100.0 vs 98.0 in the prior month. The soft data has been improving steadily since the April trade war de-escalation and will likely continue to do so in the next months. The data is unlikely to change anything for the market at this point but a good report might still be positive for the sentiment at the margin.

Today we have also Fed Chair Powell testifying to Congress but since he already spoke at the FOMC Press Conference last week, it’s very unlikely that he will deviate from his neutral stance. At “worst” he’s going to repeat what he said at the press conference, at best he’s going to sound a little bit more dovish. So, this shouldn’t derail the positive risk sentiment in the market.

Central bank speakers:

• 08:00 GMT/04:00 ET – BoE’s Bailey (neutral – voter)
• 09:30 GMT/05:30 ET – BoE’s Greene (neutral – voter)
• 11:15 GMT/07:15 ET – ECB’s de Guindos (neutral – voter)
• 13:00 GMT/09:00 ET – ECB’s Lagarde (neutral – voter)
• 13:15 GMT/09:15 ET – Fed’s Hammack (hawk – non voter)
• 13:35 GMT/09:35 ET – BoE’s Ramsden (dove – voter)
• 13:55 GMT/09:55 ET – ECB’s Lane (neutral – voter)
• 14:00 GMT/10:00 ET – BoE’s Breeden (neutral – voter)
• 14:00 GMT/10:00 ET – Fed Chair Powell (neutral – voter)
• 15:40 GMT/11:40 ET – BoE’s Pill (neutral – voter)
• 16:30 GMT/12:30 ET – Fed’s Williams (neutral – voter)
• 17:45 GMT/13:45 ET – Fed’s Kashkari (hawk – non voter)
• 18:05 GMT/14:05 ET – Fed’s Collins (neutral – voter)
• 20:00 GMT/16:00 ET – Fed’s Barr (neutral – voter)