The US Dollar may regain upward momentum as worries about escalating trade wars spur haven-seeking capital flows in the week ahead.
After spending the first half of June running higher within a bullish channel, USD/JPY broke-back down below the vaulted psychological level of 110.00, even as inflation remained below one-percent.
The Bank of England kept its benchmark rate unchanged with a vote of 6-3 at its meeting this past week. In the week ahead, the EU Summit will bring the focus back to Brexit as England's counterparts weigh progress thus far.
The Australian Dollar cannot catch a break. Its home interest rates are going nowhere as trade-war risk aversion batters it from outside. This gloomy status quo seems unlikely to dissipate.
The New Zealand Dollar may depreciate next week as the US Dollar gains on GDP and PCE data while trade war fears rise. Volatility may to be subdued on the RBNZ rate decision.
Both the Chinese Yuan and Chinese equities tumbled this past week. Looking forward, the Yuan rate and Chinese stocks may continue to suffer from the intensified US-China trade war, with tit-for-tat attacks.
The intensification of rhetoric between China and the U.S. has continued to weigh on market sentiment as investors weigh the impact of an all-out trade war between the world’s largest economies.
OPECagreed to increase output by 1mln bpd to reduce 'over compliance' with the current output agreement. Subsequently, WTI and Brent crude futures rose with the latter briefly above $75/bbl, given that markets had feared that OPEC would agree a larger production, while the 1mln bpd increase will likely represent a real increase of 600-700k bpd, which had been largely priced in.
Last week, a big driver in markets was the trade war, but once again despite initial headlines hitting futures overnight, the down open was bought. Turning attention to the economic calendar, next week holds several ‘high’ impact data releases: Consumer Confidence on Tuesday, Durable Goods and Trade Balance on Wednesday, GDP on Thursday, and Core PCE on Friday.