Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
UK pound rallies due to Irish border deal
On Monday, the UK currency managed to rally following news that the United Kingdom is on the verge of compromising on the Irish border issue with the aim of moving forward with a Brexit deal.
The currency pair GBP/USD tacked on by 0.28% ending up with 1.3066, which is not far from an earlier maximum of 1.3078.
British Prime Minister Theresa May intends to make another Brexit deal with the European bloc, as Bloomberg informed. As a senior UK government official revealed to Bloomberg, Britain seeks ways to come to a compromise on the border issue.
The compromise would be a last resort if a compromise isn’t reached and it would be conditional on Great Britain having complete access to the EU customs union. By the way, the European Union has already offered to permit Northern Ireland to trade with Ireland without full checks that May has rejected telling that it would heavily impact Great Britain.
Besides this, the USD index, normally estimating the greenback’s purchasing potential against a number of its key counterparts declined by 0.05% hitting 94.75 because trade tensions weakened and market participants shifted to riskier assets.
On Sunday, Canada and the United States managed to reach a trade deal on the North American Free Trade Agreement, several hours before the deadline.
By the way, the deal acquired a new name - the United States-Mexico-Canada Agreement. The given pact will give America access to Canadian dairy market and will also cap Canada's car exports to America.
As for the Canadian dollar, it hit a four-month maximum. The currency pair USD/CAD slumped by 0.76% being worth 1.2812.
The common currency went down because investors were still cautious after Italy's government announced a budget deficit, which defied Brussels. Moreover, the European Commission is anticipated to reject Italy’s budget initiatives.
The currency pair EUR/USD slumped by 0.02% trading at 1.1602.
Geopolitical factors and inflation remain the main drivers of financial markets. Let’s see how to use that in trading!
Have a look at the key financial instruments on Monday, February 28. Geopolitics is currently on all news frontlines. Western nations escalated sanctions on Russia for the invasion of Ukraine.
Main news that will drive the market in the upcoming week include CB Consumer Confidence Index, Canadian GDP, and US Core PCE Price Index
The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.
Every week we expect many interesting events that can shake the market.