Weekly Fundamental Forecast: The Week Ends with Raised Trade War Threats from Trump, ECB and BoE Rate Decisions Ahead
Fundamental traders are finding it difficult to determine exactly what to keep tabs on for generating volatility in the markets. Is the escalation of the US-led trade war with another $267 billion tariff threat on China and not-so-subtle threat to pull Japan in more market-moving than scheduled events like the ECB and BoE rate decisions?
The US Dollar may continue higher after last week’s spirited advance as CPI data boosts Fed rate hike bets while a plethora of risk-off catalysts stokes haven demand.
Thursday’s ECB meeting should bring little new information as policy was preset for the next year back at the June meeting; a mention of European banks’ exposure to Turkish borrowers would excite markets.
The Japanese Yen caught a bid this week when indications began to show that we may soon see tariff discussions aimed at Japan. This could complicate the return of Yen-weakness, and given the backdrop of global risk aversion, may help to soon open the door to strategies of strength.
Crude oil fell 6% from Tuesday to Friday as the Emerging Market crisis escalated, but bulls have reason to remain hopeful as demand in China remains robust and supply may soon wane.
Sterling continues to point higher across a range of currencies as negative Brexit sentiment continues to fade away as investors start to believe that a positive Brexit outcome is nearing.
Fresh developments coming out of the U.S. economy may keep gold prices under pressure should the data prints keep the Fed on track to implement higher interest rates.
The Australian economy is firing reasonably strongly, as this week is expected to underline once again. But that won’t save AUD/USD
Weak Chinese fundamentals and US threats on additional tariffs have the Yuan at risk; at the same time, it looks to China’s Central Bank for support.
The past week saw the Canadian Dollar weaken towards 1.32 against the greenback with much of the same factors contributing to the weakness. CAD direction dependent on NAFTA.
Looking to the calendar next week, both the ECB and BoE are meeting on Thursday; technical posturinggrowing increasingly concerning
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