Three weeks of a bullish run ended for the dollar in the prior week as tax reforms delay took its toll on the greenback. Investors became concerned about the delay in implimentation of the US corporate tax cuts after the Senate plan submitted on Thursday differed in key areas from the House version, revealing that corporate tax cuts might not take effect until 2019. USD/CAD fell to 1.2685 from 1.2757 the prior week. Economic data will be at the front burner this week as CPI and retail sales numbers are expected in on Wednesday. Analyst forecast show a 0.2% rise in core inflation while core retail sales is expected to slow down to 0.2% from 1% the prior month. The dollar traded flat against other major currencies at market open.
Some form of progress seems to have been made on the Brexit front. EU Brexit negotiator Michel Barnier in his meeting with the Brexit secretary David Davis in Brussels on Friday said that Brexit talks have achieved "some progress" but still more work needed to be done for the talks to move to trade relations. Moreover, he asked Britain to clarify its financial obligations to the EU within two weeks before he considers whether "sufficient progress" has been made ahead of the EU summit in December. Earlier, the UK Prime Minister, Theresa May, unveiled her plans to set an official date and time on the UK's departure from the EU. News filtering in in the course of the weekend however reveals Prime Minister's Theresa May is under pressure to resign her office. 40 conservative members of the parliament agreed to sign a no confidence in her. The Conservatives are 8 members short of what is needed for a leadership challenge. This may further the stall the already slow progress of the process of Brexit. On the economic front, CPI numbers and jobs data are to be released in the course of the new week. Rightmove HPI dropped to -0.8% during the Asian trading session, this pushed GBP/USD down to 1.3106, while GBP/JPY slipped to 148.96. No other economic data is expected for the rest of the day from the UK.
The Euro-area will also witness the release of major economic data this week as CPI, GDP industrial production numbers are all expected this week. The prior week saw the ECB revise it's growth projection of the European economy to 2.2%, while inflation forecast was revised downwards to 1.5%. Forecast show analyst expect no change in Flash GDP q/q, while final core CPI y/y is also expected to remain at 1.4%. Other data to look for include ZEW economic sentiment, current account & trade balance. The direction of these data will dictate the tune of the Euro for the week. Trade on the Euro however opened on a bearish note as it dropped to 1.1644 against the USD during the Asian trading session.
Canadian inflation will be top on investors list on Friday. The BoC governor, Stephen Poloz, noted in the prior week that the Bank's next move will be data dependent. Though employment numbers and consumer spending have been burgeoning, inflation isn't picking up as quickly as had been anticipated and economic growth in the second half of the year is showing signs of a slowdown compared to the first half. This accounts for the BoC's cautious stance on further rate hikes over the coming months. October CPI readings on Friday will therefore be watched carefully for any signs of an increase in inflation. A number higher than analyst forecast of 0.1% could give the loonie a jolly ride against the dollar.
Wage data from Australia will be in this week. Household debt has been outpacing wage growth, this has forced the Reserve Bank of Australia to leave rates as they are for quite some time. Forecast show analyst expect a 0.2 percentage points rise to 0.7%, actual data along this line will give the AUD a boost.
Wednesday morning will see the release of Japan's prelim GDP y/y. The economy is expected to maintain its growth streak as the last 6 quarters has seen the Japanese economy record positive GDP. Another quarter of expansion may however not translate to a rise of the JPY in the currency market as the BoJ's remains dovish.
A mysterious trade that moved 4 million ounces of gold in about 30 minutes on Friday drowned gold price, as it fell to 1,274.20. The yellow metal which had been trading below the psychological 1,300 point for quite some time has witnessed similar trade in recent months. Brent crude maintains its above $60 price.
Some form of progress seems to have been made on the Brexit front. EU Brexit negotiator Michel Barnier in his meeting with the Brexit secretary David Davis in Brussels on Friday said that Brexit talks have achieved "some progress" but still more work needed to be done for the talks to move to trade relations. Moreover, he asked Britain to clarify its financial obligations to the EU within two weeks before he considers whether "sufficient progress" has been made ahead of the EU summit in December. Earlier, the UK Prime Minister, Theresa May, unveiled her plans to set an official date and time on the UK's departure from the EU. News filtering in in the course of the weekend however reveals Prime Minister's Theresa May is under pressure to resign her office. 40 conservative members of the parliament agreed to sign a no confidence in her. The Conservatives are 8 members short of what is needed for a leadership challenge. This may further the stall the already slow progress of the process of Brexit. On the economic front, CPI numbers and jobs data are to be released in the course of the new week. Rightmove HPI dropped to -0.8% during the Asian trading session, this pushed GBP/USD down to 1.3106, while GBP/JPY slipped to 148.96. No other economic data is expected for the rest of the day from the UK.
The Euro-area will also witness the release of major economic data this week as CPI, GDP industrial production numbers are all expected this week. The prior week saw the ECB revise it's growth projection of the European economy to 2.2%, while inflation forecast was revised downwards to 1.5%. Forecast show analyst expect no change in Flash GDP q/q, while final core CPI y/y is also expected to remain at 1.4%. Other data to look for include ZEW economic sentiment, current account & trade balance. The direction of these data will dictate the tune of the Euro for the week. Trade on the Euro however opened on a bearish note as it dropped to 1.1644 against the USD during the Asian trading session.
Canadian inflation will be top on investors list on Friday. The BoC governor, Stephen Poloz, noted in the prior week that the Bank's next move will be data dependent. Though employment numbers and consumer spending have been burgeoning, inflation isn't picking up as quickly as had been anticipated and economic growth in the second half of the year is showing signs of a slowdown compared to the first half. This accounts for the BoC's cautious stance on further rate hikes over the coming months. October CPI readings on Friday will therefore be watched carefully for any signs of an increase in inflation. A number higher than analyst forecast of 0.1% could give the loonie a jolly ride against the dollar.
Wage data from Australia will be in this week. Household debt has been outpacing wage growth, this has forced the Reserve Bank of Australia to leave rates as they are for quite some time. Forecast show analyst expect a 0.2 percentage points rise to 0.7%, actual data along this line will give the AUD a boost.
Wednesday morning will see the release of Japan's prelim GDP y/y. The economy is expected to maintain its growth streak as the last 6 quarters has seen the Japanese economy record positive GDP. Another quarter of expansion may however not translate to a rise of the JPY in the currency market as the BoJ's remains dovish.
A mysterious trade that moved 4 million ounces of gold in about 30 minutes on Friday drowned gold price, as it fell to 1,274.20. The yellow metal which had been trading below the psychological 1,300 point for quite some time has witnessed similar trade in recent months. Brent crude maintains its above $60 price.
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