China, Brexit, Iran and Italy going wild this week

Weekly Report - 08/10/2018

This Week's Woes


The Brexit matter has grown more positive this past week. While the time is running out for the British the GBP could eventually start to run at $1.35 levels. EU could this week give a super deal to May but is she going to accept it that is the question.

Now China came back from a week’s holiday and, while tensions with the U.S stretch further, more market disorder could kick in.  If the US maintains its current direction, Beijing may look at the USMCA and wonder if it makes sense to sit down at the negotiating table.

November is nearby and penalties have finally pushed crude oil prices northwards to Trump’s fear. Iran exportations are declining, but has the Iranian government eased its policy or do they have a strategy?

The Italian alliance administration and Brussels are about to collide with the budget presentation scheduled for 15th October. We can expect more chatter and impact on government bond yields and risk appetite through the week.

The Week that Was

On Friday the USD went down after the U.S. (NFP) got in below expectations with only a gain of 134.00. The unemployment rate fell to 3.7 % and wage growth continued unchanged at 0.3 %. The greenback is still powerful versus the most major currencies on a weekly basis. The week we had in focus, central banks, and important economic indicators, but the main driver continues to be the trade tensions between the United States and China. On other news the rupee fell into a record-low area and it is doubtful if it can slow down its descent. Turkish lira continued to fall with no new actions from the Turkey Government and Italy start with a sentence, that they might not be able to save their economy.


Main Focus this Week

The Dollar Spot Index ended the week up 0.52% to $95.624. Now as for the greenback, the economic data for the following week holds first, on Wednesday, September wholesale inflation numbers, September consumer inflation, and on Thursday, the weekly jobless claims numbers. On Friday we will have the September import and export prices and prelim October consumer sentiment numbers. Outside the stats, FOMC member chatter and trade will be the main focus, and the mid-terms also expected to start receiving some consideration. Again for the popular EUR, it will have also a quiet week. The German industrial production and trade figures due out on Monday and Tuesday respectively. The main focus will be on trade data and Germany’s industrial production early part of the week. Outside of the stats, the ECB’s monetary policy meeting minutes will be released on Thursday. The EUR/USD ended the week down 0.69% to $1.1524. As for the Pound, economic data for the following week ahead will include September’s BRC retail sales monitor on Monday and House price figures on Friday that will have a minor importance on the Pound.


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