07/ 02/ 2017

Draghi's speech hurts EUR

The highlight of yesterday was the speech by ECB President Mario Draghi. He had a particularly dovish tone , and his refusal to consider tightening monetary policy lead to a sharp move lower for the euro as it slid down to EUR/AED 3.93 from 3.96.

The recent rise in Eurozone inflation had many wondering whether they would soon see an end to the ECB’s expansionary stance, yet by disregarding inflation as largely energy driven, He has essentially promised to maintain and even extend QE for a while yet.

On the political front, US Court of Appeals is scheduled to hear challenge to Trump’s travel ban. Three federal judges will hear oral arguments in the challenge to the US President Donald Trump’s executive order on immigration curbs .

06/ 02/ 2017

Week Ahead | Politics, Not Economics to drive markets

Last week EUR enjoyed the weakness of the dollar and some good European data. It will be interesting to see if this trend will continue. Last Friday U.S. monthly jobs report showed the economy continues to expand in 2017.

The unpredictable nature of the new US Administration, and its seeming willingness to antagonize allies and rivals alike, and making arbitrary judgments, appears to have increased the uncertainty in US economy. Although Administration officials articulate pro-growth sentiment, there is a concern that other policies will undermine the investment climate.

02/ 02/ 2017

BOE’s "Super Thursday"

Todays is BOE’s super Thursday as all major reports that will come out are top tier reports from UK. The bank’s interest-rate decision, Quarterly Inflation Report, meeting minutes and press conference are all roped into one. 

Yesterday better than expected ISM Manufacturing and ISM Prices data from USA failed to give any positive momentum to US Dollar as Dollar continued its’ weakness. FOMC voted unanimously to leave its policy rate within a target range of 0.50-0.75%. 

Feds mentioned that US Job gains remain solid and unemployment rate has stayed near its recent low. However Inflation remains slow and business investment is low which could be negative for US Dollar in the long run. Adding woes to the wounds US Ten Year Treasury yields also turned negative by 5 basis points, in return making rival currencies such as EUR, GBP & JPY to increase gains.

01/ 02/ 2017

Trump Comments vs Fed Decisions

The Federal Reserve will hold its first monetary policy meeting of the year, and while no change in rates is expected, the announcement statement could hold clues on the timing of the next rate hike. The U.S. dollar traded sharply lower ahead of Federal Reserve monetary policy announcement.  Softer than expected data contributed to the weakness but more importantly investors are nervous about President Trump's push for a lower currency.

The Trump administration took a strong stance against currency manipulators on Tuesday. President Trump once again made comments against Japan and China and with National Trade Council Head Peter Navarro focusing on the benefits to Germany of a weak Euro.