Weekly Fundamental Forecast: Markets Trade the EU Summit for ECB Rate Decision and US GDP Next Week
High level fundamentals proved substantive this past week between a possible Brexit path after the EU Summit and the slowest pace of growth for China in 9 years. Ahead, the scheduled updates are still material – such as US 3Q GDP as well as ECB and BOC rate decisions – but we should also keep aware of the deep fundamental currents like risk trends and trade wars
The Australian Dollar looks vulnerable, threatened by Prime Minister Scott Morrison losing his majority, rising hawkish Fed policy bets and the Bank of Canada overtaking the RBA.
Despite trading to four-year highs to open the month, October has flashed warning signs that demand could be cooling at a time when a key central bank, the Fed is putting the brakes on easy money.
The Irish border problem remains unsolved and Brexit negotiations continue to tread water as UK PM May faces a potential rebellion at home.
The Euro barely made any net-progress last week, but a busy economic calendar – including an ECB rate decision – and lingering concerns about Italy will dictate price action moving forward.
The US Dollar may continue to push higher against a backdrop of risk aversion after the Fed signaled it won’t abandon rate hikes to rescue swooning stock prices.
Gold is on course for its thirdly weekly gain with the precious metal continuing to benefit from the shaky sentiment that has gripped equity markets
A round of strong quarterly earnings were not enough to undo the downward pressure from geopolitical tensions this week. Next week could be poised for more of the same
The Chinese Yuan may avoid plunging driven by sentiment from Chinese equities; however, its bearish trend has not yet changed, without fundamental improvement.
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