Market Commentary


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Weekly comment September 18-22.09.2017

The Sterling had another very positive week last week opening around 1.3196 and closing around 400 pips higher around 1.3596 against the U.S. dollar. The cable's rise was mainly as a result of BoE's claim that rates might be increased earlier than the market expects. In addition, the U.K. released strong CPI and PPI figures and a decrease in the unemployment rate to 4.3%, which presents the image of a robust economy, despite the Brexit negotiations. In the coming week, investors will be paying attention to BoE Carney’s speech on Monday and Retail Sales on Wednesday. On Friday PM Theresa May will be delivering a Brexit speech in Florence that should give investors better view on the current situation in UK.

The Euro traded steady against the U.S. dollar, but fell more than 300 pips against Sterling. This was mainly prompted by the BoE hinting that rates might be increased earlier than expected. The Euro remained under pressure on the Sunday open following the dovish speech delivered over the weekend by the ECB policymaker Praet. This week, investors will be looking forward to the outcome of the FOMC monetary policy decision on Wednesday and the German election on Sunday. Prior to that, Euro-Zone will release their CPI figures on Monday, Germany will report the ZEW Economic Sentiment on Tuesday, and the ECB will provide their Economic Bulletin, followed by the ECB’ Praet and President Draghi’s speech on Thursday.

The U.S. dollar closed higher against most of the majors last week. For the week ahead the trend is set to neutral as traders await the Fed Interest Rate Decision and FOMC Economic Projections and Press Conference on Wednesday. The U.S. dollar is expected to be very volatile this week on the back of a rich economic calendar.

The Aussie and New Zealand dollar finished mixed against the U.S. dollar last week. The Australian dollar finished the week slightly lower last week. This was just after hitting a high of around 0.8125 that hasn’t been seen since May 2015. In the week ahead investors will be paying attention to the RBA interest rate decision on Tuesday. On Wednesday, the RBA Governor Lowe will be speaking and Australia will release their MI Leading Index.

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