This week’s trading landscape is dominated by two catalysts US-Russia peace diplomacy and US inflation data both capable of swinging markets sharply in either direction. On Friday, US President Donald Trump meets Russian President Vladimir Putin in a bid to end the three year Ukraine conflict.
Optimism, boosted by weekend talks in London between US, European, and Ukrainian security advisers, plus Putin’s calls with global leaders such as India’s Narendra Modi, has already pulled gold lower (bearish) and oil softer (bearish) as war risk premiums unwind.
If talks succeed: We expect further downside in gold and oil, upside in equities and high beta FX. If talks collapse: safe-haven flows should push gold and the yen higher, while equities and EM FX sell off.
The second major trigger is US CPI later this week. Hot CPI (>consensus) will reinforce a hawkish Fed outlook bullish USD, bearish gold, bearish equities. Soft CPI (<consensus) will revive rate cut bets bearish USD, bullish gold, bullish equities.
Adding to the mix, Tuesday’s deadline for the next round of US tariffs on Chinese exports looms. Reports suggest an extension could be announced bullish risk assets and Asian FX, bearish USD while enforcement would likely do the opposite.
With event risk stacked and potential outcomes sharply divergent, traders should keep position sizes nimble, stop losses tight, and news feeds front and center. This is not a week for autopilot trading reaction speed will be the edge.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.