G7 Meeting Wrapped up Eventful Week

Weekly Report - 11/06/2018

G7 and Trump


Last week ended with the Group of 7 meeting in Canada, where U.S. President Donald Trump refused to sign the G7 agreement, heightening trade tensions. The Canadian dollar was negatively impacted as Trump attacked Canadian PM Justin Trudeau. It was a fantastic week for the major indexes. The Dow Jones had its best weekly gain in three months while the Nasdaq composite hit a record high.

The Week That Was

The euro ended last week with gains against the dollar as markets were relieved that the Eurozone’s third largest economy finally formed a government and signaled they were not leaving the euro. EUR/USD recovered quickly from sub-1.15 levels to 1.18.

Following a 2-day meeting of the G7 member countries that ended on Saturday in Quebec, Canada, President Trump fired off angry tweets against America’s closest allies. He accused the Canadian Prime Minister as being "very dishonest and weak", creating the scene for a looming trade war with America’s neighbours. The Canadian dollar was naturally impacted and weakened against the greenback in early Monday trading.

In the commodities, space, crude oil remained under pressure last week on expectations of an increase in global output. Markets await the OPEC meeting due on June 22 in Vienna for the decision. WTI hovered near its lowest since April, trading in the $65 area.


Main Focus This Week

This is an even-filled week. Aside for the much awaited Trump-Kim meeting in Singapore on Tuesday, many major central banks hold policy meetings this week. Risk sentiment appears to be back in the markets. This was evident in the USD/JPY pair, which rose steadily in the Asian session and into the European market open to test the key 110-yen level. Trump saying he feels “very good” about Tuesday’s summit with the North Korean leader.

The FOMC will announce its policy decision on Wednesday and many analysts expect the Fed to announce another short-term interest rate hike. But the main focus will be on Fed Chair Jerome Powell’s press conference following the interest rate decision. The market’s attention will also be on the ECB meeting on Thursday and the Bank of Japan on Thursday, watching for any changes to the rhetoric in their monetary policy statements.


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