It was an unexpected volatile week for traders last week. The significant events influencing the markets have all related to political insecurity America, which has hurt the U.S. Dollar. Faith about the strength of the British economy has risen after much better than expected retail data released during the week. Nothing of significance is likely to change until Wednesday when the FOMC meeting minutes are released, a big focus for many traders.
The major influence on the markets this week will be anything Trump related, anymore claims against the Trump organization could encourage more downturn against the U.S. Dollar. He himself will be departing Saudi Arabia and heading to Israel and Palestine, where we will spend the next two days.
Here is an overview of what to look out for this week.
A steep mid-week drop was triggered by news of the political insecurities with Trump. Some expect this week is going to follow a similar path. It’s expected that the USD/JPY will move down on negative news affecting the presidency, and up on days there is no news, or an increasingly rare positive development for Trump. The yen is expected to continue to benefit from the various political developments impacting the markets. Overnight on Tuesday the Bank of Japan Governor Haruhiko Kuroda will be holding a press conference about monetary policies in Tokyo. Mr Kuroda exercises general control over the Bank’s business. He oversees the Internal Auditors’ Office.
The GBP/USD gained 150 points last week. The pair closing at 1.3028. This week’s key events are the Inflation Hearings and Secondary Estimate GDP. It will be a significant week for the Pound, starting on Tuesday morning with Inflation Report hearings, Lawmakers will be keen to know if the BoE is considering raising interest rates due to rising inflation. Thursday brings Second Estimate GDP data; The GDP is considered as a broad measure of the UK economic activity. A rising trend genuinely has a positive effect on the GBP, while a falling trend is seen as negative.
Trump’s woes have hurt the dollar, but the US economy remains solid. There are growing concerns about the British economy, with the BoE warning that living standards will drop because of Brexit, Still, the pound is back above the symbolic 1.30 level, and any hints of an interest rate hike from the BoE would likely boost the pound.
The EUR/GBP pair had a very strong week. If we can break above the top of the range for the week, some feel this market will go looking for the 0.88 handle over the longer term. Without any change in momentum and looming UK general election, it looks like EUR/GBP will continue its track upside.
The EUR/USD pair slammed into the 1.12 level during the week and towards the end of the day on Friday. EUR/USD has been influenced by US politics which will continue to impact the currency pair. However, monetary policy will come into focus with two weeks remaining prior to the Fed blackout period ahead of the June meeting.