Nike has entered into an agreement with the Chinese company AntChain to use its solutions based on blockchain. They are to be used to track shoes (and their users) that Nike equips with chips embedded in the sole For some time, however, some varieties of Nike shoes have been distinguished by chips in the sole, the purpose of which is to trace the origin of the shoes in order to be able to recognize and eliminate counterfeits at any time. It does not stop there.   Last Sunday, June 18, Nike announced a partnership with AntChain, a company belonging to the Alibaba group. The partnership is to use blockchain-based AntChain solutions to track Nike shoes. What's more, the chips in the soles are also supposed to contain dynamically encrypted NFC chips, so that tracking can be done remotely. Interestingly, Nike has its own blockchain solutions, but concentrates their use in other areas. AntChain, on the other hand, offers its blockchain in a spine-chilling formula called Traceability as a Service (TaaS). Given the state of privacy protection in the Middle Kingdom, it is not surprising that this company can be considered an expert in the field of tracking.         Technical Market Outlook: The ETH/USD pair hit the key technical resistance located at the level of $1,930 after a 19% rally from the last swing low. The intraday technical support is seen at the level of $1,777. The market conditions are extremely overbought on the H4 time frame chart, so please keep an eye on this level as the pull-back can haapen any time now.  

Norges Bank turns hawkish in fight against weaker krone Norges Bank has not only hiked rates faster than expected this month, but is also signalling plenty more tightening to come. We suspect the newly forecasted peak rate of 4.25% will be hit by the end of the third quarter. This puts NOK in a stronger position, especially against its closest peer SEK.   Norway’s central bank has hiked rates by 50 basis points, more than the 25bp that was expected – although in truth the consensus was pretty divided. What really stands out is the new interest rate projection, which is the output of Norges Bank’s model and shows where policymakers expect rates to go over the coming months. Back in March, that pointed to a peak rate of 3.5%, which implied the bank would have hiked by 25bp this month before pausing. Not only has the central bank gone further than that at this meeting, but it is now signalling a peak rate of 4.25% later this year – some 60bp higher than previously anticipated. By historical standards, that's a pretty big revision. To some extent that’s not surprising, given that the last set of forecasts came amid the US banking crisis. Global interest rate expectations have since recovered, which mechanically pushes up Norges Bank’s forecast for its own policy rate. NOK was as much as 5.5% weaker at the end of May on a trade-weighted basis, relative to what the central bank had been assuming back in March, though that difference has narrowed over recent days. That weakness also requires higher rates, according to the bank's model.   Norges Bank has increased its interest rate projection – again   But the central bank also says that higher-than-expected inflation and wage growth will also force it to do more – and interestingly it’s this which accounts for most of the upward revision to interest rate projections this year, according to a chart in the Monetary Policy Report. The bottom line is that the central bank expects another 50bp of rate hikes from here, and whether we get that in one burst or two 25bp increments probably depends on whether the krone depreciates further from here. It’s worth noting that the new forecasts assume a gradual appreciation over the coming quarters. Either way, we suspect the newly-forecasted terminal rate of 4.25% will probably have been reached by the end of the third quarter. Further hikes over and above that can't be ruled out.     One more reason for NOK outperformance over SEK The blowout hawkish surprise by Norges Bank today – both in the magnitude of the hike and the rate projection revisions – puts NOK in a relatively strong position against other high-beta peers. That is because monetary policy divergence has become an increasingly more relevant driver for FX, and if indeed we see the Federal Reserve cycle coming to an end and FX volatility decline, the search for carry will reward currencies with more attractive implied rates.   Looking at EUR/NOK, it is still too early to call for a sustained downward trend, despite Norges Bank’s ultra-hawkish turn. That is because the ECB is keeping the euro idiosyncratically strong, NOK is still the least liquid G10 currency (so the most exposed to corrections in risk sentiment) and because Norges Bank has been less NOK-supportive on the FX purchase side (July announcement next week) than it has been on the monetary policy front.   We see NOK outperform SEK for now, considering the Riksbank should struggle to deliver a similar hawkish surprise given domestic economic woes. We might see a jump to 1.03 and even 1.04 in NOK/SEK in the near term, should the Riksbank fail to offer a floor to SEK. EUR/NOK remains, in our view, vulnerable to some upward corrections in the coming weeks, but if Norges Bank delivers on its plans to take rates to 4.25% (i.e. above our estimated ECB peak rate), then EUR/NOK can trade below 11.00 before the end of this year.

European stocks are poised to open a little lower on Thursday, tracking moves we saw in the US on Wednesday following Jerome Powell's appearance in Congress. The Fed Chair appeared before the House Financial Services Committee and very much stuck to last week's script, which should come as a surprise to no one. Inflation is not under control and the vast majority at the Fed believe more rate hikes will be warranted was the message, although we got that from the dot plot.   For once, markets are buying what the Fed is selling and have priced in a 70% chance of a hike in July. But that's where they believe it ends with the easing cycle then starting around the turn of the year so the Fed and the markets aren't entirely on the same page. The data will likely determine whether markets remain in agreement on July as I imagine it will take less to convince investors that another hike isn't warranted than the Fed.   Will the BoE be tempted to hike by 50 basis points? What the Bank of England would do to be in a position to be debating whether another rate hike or two is even necessary. Instead today, the debate will be whether 25 basis points is even enough or if it should revert back to 50. The central bank has made almost no progress in getting inflation back to 2%, in fact, core inflation is still rising which should be causing some alarm on the MPC. Aside from the decision itself, the vote will be very interesting today. At each of the last three meetings, two policymakers have voted for a pause. Will they stand firm today or accept that more is needed and what will that hawkish pivot do to interest rate expectations? They're already pretty hawkish, with the terminal rate seen at around 6% early next year but that could cement the view that much more is needed.   Oil remains choppy but edging towards the upper end of its range Oil prices remain very volatile as we've seen over the last week. Trading has been very choppy as traders have tried to reconcile weaker Chinese growth, slightly more modest support from the PBOC, more hawkish central banks, and resilient economies. We appear to be in a position where we're either waiting for the economy to break or for central banks to achieve their soft landing aims. Brent remains in its lower trading range for this year between $70-$80 but we are getting closer to the upper end of that and there's still plenty of momentum in the move. A break above $80 could be a very bullish development and suggest traders are feeling less pessimistic about the economy.   Gold sell-off losing momentum ahead of the BoE Gold has been seriously testing its recent range lows over the last 48 hours but so far it's struggling to generate enough momentum for a significant move lower. Despite Powell's hawkish delivery in Congress, the yellow metal recovered earlier losses to close only marginally lower on the day, albeit below the lower end of the $1,940-$1,980 range it previously largely traded within. Ahead of day two of his testimony, this time in front of the Senate, gold is trading relatively flat and potentially in need of another bearish catalyst. The sell-off is losing momentum although it could get an extra nudge from the BoE if we see a more hawkish shift.

Markets have certainly reacted. In money markets, SONIA OIS pricing has shifted higher by up to 15bp since yesterday alone. A forward of 34bp higher for the upcoming meeting period implies that markets are now seeing a more than 30% chance of a 50bp hike today. The BoE reaching a terminal rate of 6% by early next year is now the market’s base case - 150bp above the current interest rate level. For comparison - and to highlight the significance of the recent shift in pricing - after the May meeting the market was looking for a peak rate of 4.75% to 5% after this summer.   The main question around this meeting for markets will be to what extent the monetary policy committee will push back against this extreme market pricing. Our economists think pushback will be unlikely. For one, the BoE appears to be just as wise about the near-term outlook of inflation as the market and is probably unwilling to pick a side for the risk of having to walk back later. And BoE officials have passed on plenty of opportunities to already do so in the recent past.     Inflation and wage data have led to aggressive market pricing of the BoE       oday's events and market view Central banks will remain in focus, certainly with the BoE meeting today as well as the Swiss National Bank and Norges Bank decisions in the broader global picture. But we also have Fed Chair Powell’s second day on Capitol Hill giving testimony to the Senate Banking panel today. Add to that a busy slate of other speakers, where from the Fed we will hear from Christopher Waller, Michelle Bowman, Loretta Mester and Thomas Barkin, while over in the eurozone, the European Central Bank's Fabio Panetta and Luis de Guindos are speaking. Given what is priced, the question is, of course, how much more can be priced in. As the UK CPI release has shown, data remains key. And given central banks' narrow focus, inflation data is particularly important. Other data feeding into investors’ concerns over the longer-term outlook, with central banks potentially taking the tightening too far, could further feed into the curve flattening bias. Today’s US initial jobless claims are expected to remain elevated after they had come in higher than expected last month. Other releases today are data on US existing home sales and the Chicago and Kansas Fed activity indices. In the eurozone we get the preliminary consumer confidence reading for June. Sovereign primary market activity today is limited to the US selling a 5Y inflation-linked bond.

Rates Spark: No pushback Central banks continue to signal that their work is not done. The Bank of England is set to hike rates today, but more importantly, it is unlikely to push back against aggressive market pricing given its own uncertainty about near-term inflation. These circumstances add to the persistence of the curve's flattening bias, even around record inversions.   No change in message means no change in curve flattening bias for now The spillover into other markets was limited in the end, but the higher-than-anticipated UK inflation data yesterday is a reminder of what drives the current hawkish stance of central banks. The focus on current (core) inflation to determine policy success will also mean that the flattening bias for yield curves will not pass quickly. Just as EUR and Sterling curves have moved to record inversions, a similar test of previous lows looks imminent in the US as well. Market circumstances such as the still punitive carry on steepening positions and declining liquidity going into summer only add to the persistence of the bias.   Fed Chair Jerome Powell reiterated the Fed’s “strong” commitment to bring inflation back to the 2% target, even though the prepared remarks of his testimony to the House broadly stuck to the script of last week’s FOMC meeting.   Policy rates were held to give time to assess the impact of past policy tightening while "nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year." Recall that the Fed's dot plots had been adjusted to see two more rate hikes this year. At the same time, with the messaging not going beyond what was said earlier, market pricing of the near-term Fed path was little changed - one hike is close to being fully discounted. If anything, there was a tendency to further price out cuts from the peak policy rate.   The BoE is unlikely to push back against market pricing The Bank of England will make its decision today against a backdrop of inflation data continuing to surprise on the upside. The consensus is unanimously looking for a 25bp rate hike today, though likely most replies came ahead of yesterday’s data and some might now at least highlight growing risks of a 50bp move today. And indeed, the BoE itself might see one or two of its members voting for a larger move today. Our economist thinks the bar for a 50bp hike remains high, but a 25bp hike today and another one in August now look like a given.    

The Czech National Bank fights dovish market expectations The vote split indicates that inflation risks have diminished, but the governor continues to favour hawkish messages. Disinflation in the summer months will be a problem for the central bank in combatting the market's dovish expectations. Later, however, disinflation is set to slow significantly, which may lead to a delay in rate cuts.   Vote split more dovish, hawkish threats remain The CNB board left rates unchanged yesterday, in line with expectations. The vote split moved from 4:3 to 5:2 in favour of stable rates. Two members voted for a 25bp rate hike. We suspect that newcomer Jan Prochazka may have joined the majority this time - names will be confirmed on Friday, in next week's Minutes. From this perspective, it would appear that the hawkish story is over.   During the press conference the governor indicated that he intends to continue the hawkish stance. He reiterated that the CNB is ready to intervene in the FX market if needed and that rates are high enough. He also highlighted that, despite weaker-than-expected economic numbers, including inflation, upside risks to inflation remain. Thus, if wage growth, household consumption, inflation or fiscal policy surprises to the upside, he said the entire board is prepared to hike rates in the coming months. Putting threats of rate hikes aside, the main message we think the CNB is trying to send is that rates will remain stable for longer than the market and CNB currently forecast.

Dow Jones Industrial Average has underperformed against the S&P 500 and Nasdaq 100 in the past 2 sessions. Broke minor support yesterday now turns into key short-term resistance at 34,310. Sill sandwiched within a complex sideways range configuration in the medium-term horizon with its range resistance at 34,630.   The Dow Jones Industrial Average (DJIA) has continued to be one of the underperformers among the major US benchmark stock indices ex-post Q2 “Triple Witching” options expiration since last Friday, 16 June. In the past two sessions, the DJIA has declined by -1.03% versus the S&P 500 (-0.84%), Nasdaq 100 (-0.76%), and small-cap concentrated Russell 2000 (-1.2%).   Sandwiched within a medium-term complex sideways range in the past 6 months   Fig 1:  US Wall St 30 medium-term trend as of 21 Jun 2023 (Source: TradingView, click to enlarge chart) The price actions of the US Wall St 30 Index (proxy of the Dow Jones Industrial Average futures) have continued to churn within a medium-term complex sideways range configuration in place since 13 December 2022. The recent minor up move from the 25 May 2023 low of 32,561 has managed to stage a retreat right below the upper boundary of the range configuration now acting as resistance at 34,630 (see daily chart).   Minor support broke but still above the 200-day moving average     Fig 2:  US Wall St 30 minor short-term trend as of 21 Jun 2023 (Source: TradingView, click to enlarge chart)   Yesterday, the Index has broken below its minor ascending trendline support from the 1 June 2023 low now acting as a pull-back resistance at around 34,310 which also confluences with the 61.8% Fibonacci retracement of the current minor decline from the 16 June 2023 high to yesterday, 20 June 2023 low (see 1-hour chart) Short-term momentum is still showing no clear signs of a bullish reversal as indicated by the 1-hour RSI oscillator that is still below a corresponding resistance at the 49% level. A break below the 33,830 near-term support exposes the next support at 33,470 (minor swing low area of 7 June 2023 & close to the 50% Fibonacci retracement of the prior up move from 25 May 2023 low to 16 June 2023 high). On the flip side, a clearance above 34,310 key short-term pivotal resistance negates the bearish tone for the next resistance to come in at 34,630 (medium-term range top as illustrated on the daily chart).

Powell testifies on the Hill Fed Chair Powell will testify before Congress on Wednesday and Thursday and will face questions about the Fed’s rate path.   The Fed paused at this month’s meeting but is expected to raise rates at the July meeting. Powell has said that he can pull off a soft landing that will avoid a recession and large layoffs, but many lawmakers remain concerned that more rate hikes this year will cause significant damage to the US economy.   USD/CAD Technical USD/CAD is testing resistance at 1.3253. Above, there is resistance at 1.3329 1.3175 and 1.3047 are providing support lines