Market Update: Forex, Precious Metals, Interest Rates and Brexit
As UK’s Prime Minister May returns from the Summer Break, the EU appears open to a stopgap arrangement, but argues that other matters such as Citizens’ Rights and the Brexit Bill need to be resolved first. On the other hand, the case for the Bank of England’s Interest Rates raise is weakening. As Brexit nears, analysts foresee that the UK Economy will lose more momentum this year. The UK Inflation Data however defied forecasts on Tuesday, with the Consumer Price Index remaining steady at 2.6% in July. The lower than expected CPI figure led most analysts to suggest a UK interest rate rise was not imminent, which helped send the pound lower.
Renewed optimism in Trump’s Administration and positive US Retail Sales supported the Dollar Tuesday. The Dollar strengthened against the Yen, while Sterling traded flat. With the release of better-than-expected US Retail Sales data, the Dollar rallied across board strengthening expectations of another Fed Interest Rate hike this year. Australia’s Data releases took centre-stage early Wednesday during the Tokyo Session. The overall numbers quelled RBA’s worries of higher inflation.
William Dudley’s hawkish comments renewed Fed Rate Hike expectations, causing the Euro to decline during the London Session Tuesday. USDJPY rallied, GBPUSD took a nose-dive, USDCHF slumped and AUDUSD retreated. Wednesday saw the Sterling rebound following the Job Report data. The Euro retreated on the heels of the latest ECB headlines that Draghi might not deliver a fresh policy message next month. USDCHF declined while AUDUSD recovered from a 1-month low.
Wall Street Session
The Euro weakened against the Dollar Tuesday, following North Korea Leader Kim Jong Un’s decision to delay firing missiles toward the US Pacific Territory of Guam. Sterling declined, as well as the Canadian Dollar. Oil prices saw weaker demand in China and Canada’s Housing Data fell for the fourth straight month.
By Wednesday, UK Job Report came in negative at 4.4%, while the Euro Zone economy expanded 0.6%. Global Equities continued to rebound and Gold remained under pressure. The rest of the week will see Investors focusing on the following potential catalysts:
Market Potential Catalysts Thursday the 17th
Australia Employment Change (MoM) (Jul) (9:30 PM ET) (Wed.)
UK Retail Sales (MoM) (Jul) (4:30 AM ET)
EuroZone CPI (YoY) (Jul) (5:00 AM ET)
US Philadelphia Fed Manufacturing Index (Aug) (8:30 AM ET)
Friday the 18th
Canada Core CPI (MoM) (Jul) (8:30 AM ET)
US Michigan Consumer Sentiment (Aug) (10:00 AM ET)