Market Commentary


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Weekly Commentary 28 May 2018

The Euro continued its downtrend for a 4th week in a row, the previous week’s weakness can be attributed to turmoil in Italy, Europe’s 4th largest economy by nominal GDP. Adding to the political uncertainty European PMI figures came in lower than expected indicating lower than expected growth in the eurozone. For the week ahead investors should pay attention to political events as they unfold in Italy and Germany, on the economic release side the following week is a bit thin however Wednesday and Thursday’s CPI figures bear watching as well as Italian unemployment figures on Thursday.

The Sterling Pound had a week marked by weakness, down against most of its peers such as the JPY (-2.5%) and the CHF (-1.72%). CPI figures came in lower than expected thus perpetuating the weakness in GBP however it was briefly buoyed by better than expected Retail Sales figures which came in at 1.6% vs an expected 0.8%. For the week ahead traders should watch Friday’s PMI figures.

The Greenback had a mixed week, showing strength against some pairs such as the CAD against which it ended higher +0.73% while against some others it ended lower such as the JPY against which it was down -1.19%. The gist of Wednesday’s FOMC meeting minutes was that the Fed will allow inflation to temporarily overshoot its 2% target while also signalling a potential rate hike in June. For the week ahead, we have Tuesday’s Consumer Confide3nce report, Wednesday’s mixed GDP and Employment data, on Thursday we have several FOMC speeches and Friday we have NFP figures.

The Aussie had a relatively stable week ending higher against most of its peers again somewhat tracking gold values. For the week ahead, we have Thursday’s Capital Expenditure report which tracks the amount of new capital investment made by private business. The last report caused consternation of Aussie bulls as it came in much lower than expected (-0.2% final vs +1.0% expected), this time around analysts are forecasting a growth of 1.1%.

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