Capital continues to move out of defensive havens and back into risk markets. Gold continued its selloff, dropping another 1.0% in a run down toward a test of $1.3000 while JPY continued to retreat relative to USD and EUR. Concerns that political strife could disrupt the global economy continue to fade amid chatter that the US could be prepared to stay in the Paris climate accord under the right circumstances.
Sterling slipped back Monday in an expected trading correction. Compared with the huge gains of the last week, the pullback was moderate with Cable holding near $1.3500. In a speech Bank of England Governor Carney confirmed that the MPC is considering raising interest rates in the coming months but didn't hint toward which meeting they may act at. Brexit remains a hot topic that could impact trading this week with PM May travelling and preparing to make a big speech on Brexit Friday and cabinet ministers sparring over direction with talks with the EU set to resume next week.
CAD took a big tumble following comments from Bank of Canada Deputy Governor Lane. He indicated that the central bank is monitoring the impact of the higher Loonie, the bank’s two recent interest rate hikes and the potential impact of NAFTA renegotiations when considering what to do next about monetary policy. The plunge in CAD means that the street took the comments as dovish, suggesting that a third Canadian rate hike this year is unlikely.
Looking ahead, it’s a light day for data, headlined by Australian house prices. President Trump is in New York meeting with other world leaders and preparing to speak to the UN General Assembly. The two day Fed meeting starts Tuesday with an announcement on balance sheet normalization expected Wednesday. Traders may also be starting to position for this week’s Bank of Japan meeting.
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.