Markets actually stood in place while waiting for the Fed's verdict in the evening. S&P 500 has somewhat pulled back after reaching another record high, while Asian exchanges are also trading with minimal deviations from the previous day. In turn, the yield is stable. The most interesting thing is the change in the forecasts for the rate and the press conference of J. Powell, at which he will have to answer uncomfortable questions about the timing of the QE curtailment.

As for the political result of the Putin-Biden meeting, the markets will evaluate them primarily as a factor that can increase or reduce global tensions, but the impact on the prospects for monetary policy and on global profitability will be minimal if there will be.

USD/CAD

The week passed relatively calmly for the Canadian dollar. The key event was the Bank of Canada's decision on the interest rate. As expected, the overnight rate was kept at 0.25%, and the QE program (asset repurchase in the amount of at least $ 3 billion per week) will also continue in the same volumes. The official comment was almost the same as April one.

According to the bank, economic growth is stable, despite a slight lag behind forecasts (5.5% against 6.5%). Digitalization is developing rapidly, which is not surprising amid the restrictions and the transition to remote access, but at the same time, there is a risk of irretrievable loss of some jobs.

In terms of near-term prospects, they seem to favor further demand for the Canadian dollar. First, vaccinations in Canada are progressing at a faster pace, so the economic recovery in the summer months may be stronger than expected. Second, price pressures are rising, which increases the chances of inflation growth in the coming months. If the forecasts are justified, and there are serious prerequisites for this, especially with a sharp increase in American consumer inflation, then the BoC may begin to reduce QE next month.

These considerations, paired with the simultaneous rise in oil prices, will further boost demand for CAD. And although the net long position fell by 302 million during the reporting week, the bulls' advantage in CAD remains very strong. The estimated price is below the long-term average and is directed downwards.

It can be assumed that the time has not yet come for the upward correction of the USD/CAD pair. Today, inflation data for May will be published along with political events and the FOMC meeting, which can lead to quite strong volatility. A downward movement is expected. The first target is 1.20, and the medium-term is the support zone of 1.1860/1910.

USD/JPY

The Japanese yen continues to consolidate just below the March high since there are no special reasons to exit the range. After the release of the GDP data for Q1, it became clear that the chances of returning to the pre-crisis growth trajectory do not look very strong, as a number of composite consumer spending indices calculated by Mizuho Bank show that stabilization has come below the pre-pandemic level.

In fact, weak consumer activity indicates slower GDP growth and then the lack of inflationary pressures. It should also be noted that the dynamics of foreign trade were negative in January-March, but it is expected to correct the balance in favor of exports, which will increase the income of exporters and increase demand for the yen. All of these factors are weak but are essentially bullish for the yen.

The net-short position in the yen declined again, this time by 1.12 billion, to -4.26. The bearish advantage is still significant, but the dynamics are in favor of the bulls. The estimated price goes down from the long-term average.

It can be assumed that the chances of leaving the range downward slightly increased. The targets are set at 108.60 and 108.35, but since the Japanese yen is highly dependent on global demand for risk, the result of today's talks between Putin and Biden could lead to an unexpectedly strong movement in either direction.