Euro Looks for Direction

Weekly Report - 02/07/2018

Political tensions in Germany


The euro was bid at the end of last week on excitement surrounding the EU Summit which ended with an agreement on Migration Policy being reached. It’s a different picture now for the single currency heading into the new week as political tensions in Germany surface.

The Week That Was

The euro was up almost a big figure against the dollar to reach above $1.1680 after an EU deal on migrants and European inflation hitting the expected 2% level. Oil saw a surge higher above $74 a barrel by late Friday as OPEC’s plan to increase output at the June meeting has failed to ease concerns of supply outages from Canada, Libya and Iran. It is important to note that WTI oil advanced for a fourth consecutive quarter and had the longest quarterly rally seen in 8 years. Gold was down over 3 percent in June and had the worst month since November 2016, mainly due to the strong greenback.


Main Focus This Week

The new trading week started with soured sentiment, with investors unlikely to take on risk, as trade war concerns linger and data out of China disappointed today. Factory data out of the world’s second largest economy over the weekend added to concern that growth is softening. Looking ahead the week is a busy one as besides PMI numbers from around the world, all eyes will be on the Fed minutes and the all-important U.S. nonfarm payrolls report. Meanwhile, headlines out of Germany will be closely watched as tensions arise there on immigration policy. Chancellor Angela Merkel’s coalition government is at risk of falling apart after Horst Seehofer, who is also leader of the Christian Social Union (CSU) and a key party in Mrs Merkel's coalition, has offered to resign. We await more headlines as the two party leaders will hold crisis talks later. EURUSD fell on the news to move off Friday’s high of $1.1690.


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