Fed, OPEC and G7 Compete for Attention
- US Dollar may rise on hawkish Fed-speak, FOMC minutes
- Bank of Canada policy decision might pass without fireworks
- OPEC to decide on output cut extension, G7 leaders to meet
The US Dollar snapped a four-week winning streak as political jitters following the ousting of FBI Director James Comey rattled markets. Worries about instability fueled risk aversion and cast doubt on the viability of upcoming Fed rate hikes.
This narrative will be tested in the week ahead as the release of minutes from May's FOMC meeting headlines a busy docket of scheduled commentary from US central bank officials. If the Fed's conviction appears unshaken, the greenback may recover.
Hawkish comments may sound all the more credible if they are accompanied by supportive economic data. As it happens, the second revision of first-quarter GDP figures is expected to show an upward revision from flash estimates.
A monetary policy from the Bank of Canada may pass without a significant response from investors. Markets are pricing in the probability of no change in the baseline lending rate at a hefty 98 percent.
OPEC officials will meet with like-minded counterparts outside the cartel to decide on whether to extend a production cut scheme expiring mid-year. Russia and Saudi Arabia have already voiced support, as have most of the participating nations.
Leaders of the G7 countries will meet in Sicily this week. The summit will mark the first such sit-down for newly minted US and French presidents Trump and Macron, respectively. Headlines from the outing may impact broad-based sentiment trends.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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