Still Waters Before Central Bank Waves

June 16, 2025
6 min read
  • Fighting between Israel and Iran is still running hot. Financial markets are cool about it. Crude oil prices pulled back sharply from Friday’s high, global equity markets are mostly up, and USD is steady.
  • Quiet data day as central bank decisions loom. Fed and BOE to deliver dovish holds. SNB and Riksbank to trim rates 25bps. Norges Bank and BOJ to stand pat. Check-out the details in our Drivers for the Week report.
  • President Donald Trump expects some trade deals to be made at the G7 summit.

You’re Invited

Webinar: What's shaping Q3 markets? Register Here

Join BBH’s Win Thin, Elias Haddad, and Jorge Aseff, Portfolio Manager Inflation-Indexed Fixed Income as they discuss: reactions to the June Fed meeting, the dollar’s current and future reserve status, and the current US economic landscape

30 Minutes, Monday June 23rd | 7:00 AM PDT | 10:00 AM EST | 15:00 BST | 16:00 CET.

Still Waters Before Central Bank Waves

US

USD is mixed under Friday’s high. Escalating military tensions in the Middle East can continue to lend USD a safe-haven bid. However, we would look to fade USD strength as the fundamental downtrend is intact: (i) we look for a dovish Fed hold this week, (ii) the Trump administration implicitly supports a weaker dollar, (iii) the US economy faces stagflation risk, and (iv) confidence in US trade, fiscal, and security policies has taken a big hit.

Brent crude oil prices is down under $75/bbl after spiking as much as 12% to a high of $78.5/bbl on Friday. A closure of the Strait of Hormuz by Iran, where nearly one-fifth of global oil shipments pass through, is the biggest upside risk to crude oil prices. However, we doubt Iran will shut down the strait. First, Iran relies heavily on this passageway for its own exports. Closing it would cripple its own economy. Second, the US and allies maintain strong naval presence in the region. Blocking the strait could trigger severe military repercussions against Iran.

The G7 leaders’ summit kicked off Sunday and will wrap up Tuesday. Trade discussions will be high on the agenda just weeks before the US 90-day tariff pause ends on July 9. President Donald Trump said he expects some trade deals to be made at the summit.

CHINA

USD/CNH is trading heavy under key resistance at 7.2000. China’s May real sector data was mixed. Retail sales grew more than expected by 6.4% y/y (consensus: 4.9%, April: 5.1%), the most since December 2023. An annual shopping festival that started earlier than usual boosted retail sales activity in May. In contrast, industrial production growth undershot expectations at 5.8% y/y (consensus: 6.0%) vs. 6.1% in April while fixed-asset investment eased at an annual pace of 3.7% YTD (consensus: 4.0%) vs. 4.0% in April. Overall, China’s economic recovery remains fragile, and we expect more stimulus measures in the second half of the year.

EUROZONE

EUR/USD is slightly firmer around 1.1560 after testing a low of 1.1490 on Friday. Eurozone Q1 labor costs data is up next (10:00am London). The ECB projects labor costs growth to slow to 3.1% y/y in Q1 vs. 3.7% in Q4 and drift down to its historical average of 2.0% by 2027. The ECB is almost done easing, but low wage pressures leave room for the ECB to deliver more cuts if necessary. The swaps market implies just one 25bps rate cut over the next 12 months and the policy rate to bottom at 1.75%.

Brown Brothers Harriman & Co. (“BBH”) may be used to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries.This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners.© Brown Brothers Harriman & Co. 2024. All rights reserved.

As of June 15, 2022 Internet Explorer 11 is not supported by BBH.com.

Important Information for Non-U.S. Residents

You are required to read the following important information, which, in conjunction with the Terms and Conditions, governs your use of this website. Your use of this website and its contents constitute your acceptance of this information and those Terms and Conditions. If you do not agree with this information and the Terms and Conditions, you should immediately cease use of this website. The contents of this website have not been prepared for the benefit of investors outside of the United States. This website is not intended as a solicitation of the purchase or sale of any security or other financial instrument or any investment management services for any investor who resides in a jurisdiction other than the United States1. As a general matter, Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) is not licensed or registered to solicit prospective investors and offer investment advisory services in jurisdictions outside of the United States. The information on this website is not intended to be distributed to, directed at or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Persons in respect of whom such prohibitions apply must not access the website.  Under certain circumstances, BBH may provide services to investors located outside of the United States in accordance with applicable law. The conditions under which such services may be provided will be analyzed on a case-by-case basis by BBH. BBH will only accept investors from such jurisdictions or countries where it has made a determination that such an arrangement or relationship is permissible under the laws of that jurisdiction or country. The existence of this website is not intended to be a substitute for the type of analysis described above and is not intended as a solicitation of or recommendation to any prospective investor, including those located outside of the United States. Certain BBH products or services may not be available in certain jurisdictions. By choosing to access this website from any location other than the United States, you accept full responsibility for compliance with all local laws. The website contains content that has been obtained from sources that BBH believes to be reliable as of the date presented; however, BBH cannot guarantee the accuracy of such content, assure its completeness, or warrant that such information will not be changed. The content contained herein is current as of the date of issuance and is subject to change without notice. The website’s content does not constitute investment advice and should not be used as the basis for any investment decision. There is no guarantee that any investment objectives, expectations, targets described in this website or the  performance or profitability of any investment will be achieved. You understand that investing in securities and other financial instruments involves risks that may affect the value of the securities and may result in losses, including the potential loss of the principal invested, and you assume and are able to bear all such risks.  In no event shall BBH or any other affiliated party be liable for any direct, incidental, special, consequential, indirect, lost profits, loss of business or data, or punitive damages arising out of your use of this website. By clicking accept, you confirm that you accept  to the above Important Information along with Terms and Conditions.

 
1BBH sponsors UCITS Funds registered in Luxembourg, in certain jurisdictions. For information on those funds, please see bbhluxembourgfunds.com



captcha image ↻

Type in the word seen on the picture

I am a current investor in another jurisdiction

1 of 2

2 of 2