Saturday night saw another incident in London. My thoughts go to the victims and their families and friends, and my appreciation is with the police, who seem to have reacted incredibly fast. These incidents will most likely reinforce Theresa May’s influence, as the Conservative Manifesto is much tougher on immigration. But May is right: enough is enough. These events need to stop.
This week we have a trifecta of risk events – and they’re all on Thursday! Core EU markets will be closed Monday for a bank holiday so flows will be tough to read until London comes fully online.
USD: FBI’s Comey will testify before the Senate Intelligence Committee (apparently Thursday), and that will take center stage since ISM Services & Factory Orders (Mon) will be the only other event this week.
EUR: it’s ECB week. No policy change is expected but Draghi’s conference will be closely watched. Business & Consumer data justify a hawkish stance, but inflation is still below hawkish levels. A neutral stance – with no big changes – is most likely what the market is expecting.
UK: It’s all about Thursday’s Election and the Pound will zig-zag based on polls. We’ll be discussing this more in our UK Election webinar tomorrow morning, at 12 Noon CET. Services PMI (Mon) & Manuf. Production (Fri) will have less influence than usual.
CAD: busy week for the Loonie as well, with Ivey PMI (Tue), Building Permits (Wed), New House Price Index (Thur) and Employment (Fri).
AsiaPac: busy week for Australia with RBA (Tue) but also Q1 GDP (Wed), trade balance (Thur) and PMI. China’s trade balance (Thur) and Caixin PMI (Mon) will also affect Aussie. Since the last meeting, labor market conditions, inflation, manufacturing and trade conditions deteriorated. Improvements were only seen in retail sales and housing. Expect a dovish RBA, but with no rate adjustment.
Going into the week I remain bullish on US equities and US bonds; I remain bullish on Gold as well. In FX, NZD & Euro are the leaders, while USD and AUD are the laggards. Watch your step on GBP prior to the elections.
About the Author
Justin Paolini is a Forex trader and Coach. He is a member of the team at www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you cansubscribe to the newsletter for free.