Market Highlight 09.06.2026

The European Central Bank is expected to become the first major Central Bank to raise policy rates in response to the impact of the conflict in the Middle East. Its meeting this Thursday will mark the first policy rate increase in nearly 3 years, although the scope for further hikes is limited by the weakening state of the European economy. Even so, the market is still pricing in up to 3 rate adjustments this year, which would lift the policy rate to 2,75% from the current 2%, and will be looking for fresh guidance from ECB President Christine Lagarde in her post-meeting remarks. Inflation in Europe has risen to 3,2% in May from 1,9% in February. However, most of this increase has been driven by higher energy prices, which have affected the prices of energy-intensive services such as airfares. Data released on Friday showed that the European economy contracted in the first quarter of this year, leaving the EU at risk of slipping into recession in Q2 after retail sales fell in April as consumer confidence weakened.

The Federal Reserve and the Bank of England will hold policy meetings next week, but both are expected to keep interest rates unchanged at current levels. The Bank of Japan is expected to raise rates on 16/6 as the Middle East conflict is adding to underlying inflation pressures. The Japanese Government is increasingly concerned that the sharp rise in energy prices could trigger second-round effects, potentially showing up in the form of stronger wage demands from workers, which would in turn push businesses into another round of price increases to cope with rising costs.

Domestically, USD/VND moved back up to around 26.345 yesterday, in line with the USD’s strong gain of nearly 0,65% on Friday.

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