12/ 06/ 2019

Draghi, Inflation, UK Politics and Trump Keep the EUR, USD and GBP in Focus

The markets had been on a tear since the start of the month, fueled by dovish comments from Federal Reserve Chairman Jerome Powell on June 4, which opened the door to a sooner-than-expected interest rate cut. The dollar hovered near an 11-week low against its peers on Tuesday late session, weighed by expectations the U.S. Federal Reserve could cut interest rates sometime in the next few months.

Investor focus is now on the Fed’s next policy meeting on June 18-19 and what kind of signals the central bank could offer on the direction of monetary policy as a chance to see by how much and for how long it is ready to ease policy.

Looking ahead, focus now shifts to Draghi, U.S inflation numbers and geopolitics. Activity could be subdued with a very light European session. ECB President Mario Draghi is scheduled to speak but he isn’t expected to say anything different from his press conference less than a week ago.

11/ 06/ 2019

Dollar gains as Mexico tariffs averted, boosting risk sentiment

The greenback weakened lastweek on concerns that trade disputes would hurt the global economy. U.S. jobs data also was weaker than expected, feeding expectations the Federal Reserve would cut U.S. interest rates. The dollar gained on Monday after the United States and Mexico reached a deal to avoid tariffs, while the euro faltered after sources said European Central Bank policymakers were open to cutting interest rates.

Looking ahead, there are no material stats due out of the Eurozone to provide direction to the majors. It could be a testy day ahead. The lack of stats could test market risk appetite ahead of U.S wholesale inflation figures due out later in the day. Following the Friday U.S – Mexico agreement, market focus will likely return to the economic outlook and sentiment towards the U.S – China trade war. Trump has issued a new threat of fresh tariffs. This time it is dependent upon Chinese Premier Xi’s attendance at the G20. There was some positive reaction to China’s May trade figures, which revealed a narrowing of the trade surplus with the U.S since the start of the year. The numbers will need to continue to reflect a downward trend in the months ahead to support the view of a material shift in trade terms.

10/ 06/ 2019

Week Ahead | Markets caught between Geo-Politics & Trade Woes

Dollar weakness was the main theme over the last week. It started with worries over Trump’s tariff threats to Mexico. Then Fed officials came out acknowledging the risks from Trump’s tariff policies and signaled their openness to rate cuts should trade tensions worsen. 

Dollar was undoubtedly the weakest one. Yen followed as the second weakest. Major treasury yields dropped, with German 10-year bund hitting new record low. But Yen chose to follow surging stocks on Fed cut speculations. Sterling was the third weakest, saying farewell to UK Prime Minister Theresa May. Canadian Dollar was initially pressured by free falling oil prices, but then rebounded on stellar job report to close as second strongest. BoC is few of those who’s less likely to cut rates. Euro was the third strongest after less dovish than expected ECB announcement. 

It’s another action-packed week ahead. Central bank chatter, trade, UK politics, and economic data will keep the markets on their toes.

02/ 06/ 2019

Week Ahead | Stats, Monetary Policy and Geopolitics to Drive the Majors

A bearish week rounds off a bearish month, with economic indicators and Trump delivering an inverted U.S Treasury yield curve.

The euro strengthened against the U.S. dollar on Friday, as fears of a global recession and the Sino-U.S. trade dispute weighed on greenback. Opening a new front in the trade war, U.S. President Donald Trump said Washington will impose a 5% tariff on imports from Mexico from June 10, which would then rise steadily to 25% until illegal immigration across the southern border was stopped.

Sterling strengthened against the dollar on Friday, as currency markets were swept by rising risk aversion. U.S. President Donald Trump's shock threat to slap new tariffs on Mexico sent investors to the perceived safe haven of government bonds and the Japanese yen, with political uncertainty in Britain also undermining demand for the currency. In Britain, politics are mired in Brexit and nearly a dozen candidates are now vying for the prime minister's job, with the bookmakers' favorite, Boris Johnson, saying the UK should leave the European Union on Oct. 31 even without an agreement on the terms of its departure.