Congratulations! Gold has just opened a new era... or, rather, reopened...
5 important events this week will bring us!
- Speech by the Fed Chair Jerome Powell (Tue, 02:00 MT) – The Fed chair is due to speak during the Financial markets conference in Florida. His comments may shake the USD.
- British CPI (Wed, 11:30 MT) – The level of the consumer price index is forecast to reach 2.2%. Higher figures will support the British pound amid the Brexit pressure.
- Canadian core retail sales (Wed, 15:30 MT) – The indicator is expected to advance by 0.8%. If its actual level is higher, the loonie will rise.
- Eurozone PMIs (Thu, 10:15-11:00 MT) – If the indicators are higher than the forecasts, the EUR will go up.
- UK retail sales (Fri, 11:30 MT) – Positive release of the indicator of retail sales will be good for the GBP.
- During the Asian session, the market sentiment was softer. However, at the start of the European trading session, the US-China trade tensions have started over again as China warned about the countermeasures on Huawei case. The US president Donald Trump and his administration banned Huawei and other telecommunication firms from doing business with American companies last week. Fresh uncertainties increase fears in the markets.
- Also, the People's Bank of China announced that it would continue to keep the yuan stable within the balanced range. It strengthened the Chinese currency.
- The unexpected victory for conservative Prime Minister Scott Morrison pushed the Australian dollar higher. He promised to simplify the tax system and introduce a tax cut.
- The Brazilian real continues to weaken due to the protests against the freeze to the education budget and lower growth forecasts for Brazil from BNP and Goldman Sachs. Moreover, as an emerging markets currency, it keeps being affected by the trade tension between the US and China.
- Europe anticipates the elections on May 23-25. During these elections, the citizens of the 28 countries will vote in a new European parliament Analysts anticipate Eurosceptic and anti-immigration parties to gain a lot due to the Brexit and global uncertainties. We need to pay attention to the parties from the UK. If the conservative party of Theresa May gains fewer votes, than others, it will increase the pressure on the current prime minister to resign. Also, keep an eye on the comments by the Italian Deputy Prime Minister Matteo Salvini. He said that Italy could break the EU budget rules on debt levels if necessary to raise the level of employment. If his party succeeds, the fears in the market may weaken the euro.
- During the OPEC+ meeting this weekend, the members agreed to maintain the production cuts. It pushed the prices for crude higher.
The US NFP will be published on August 7 at 15:30 MT time.
The market sentiment is indeed risk-on today. Stocks, riskier currencies and gold are rising amid the waning US dollar.
Follow the BOE monetary policy and rate statements on August 6 at 14:00 MT time…