Good Morning and Happy Friday!!
We continue to see a weak Dollar as political worries in the U.S continue, there is even rumours circulating that president Trump will be forced from office in the wake of the FBI/Russia scandal. The threat of impeachment has seen investors flock to safe haven assets which has seen a significant Dollar selloff. In the currency market the main benefactor of this has been the Euro.
EUR/USD is set to close the week above 1.10 for the first time since late October, and with bets of a U.S rate hike now diminishing we may even see EUR/USD have a look at the 1 year high around 1.1250.
GBP/USD has also rallied higher over the last few days – boosted by stronger than expected retail sales data from the U.K yesterday. Cable reached a high of 1.3045 yesterday morning but didn’t sustain the rally and has subsequently fallen back as low as 1.2940 overnight.
Today, there is no US data and only second tier figures from the Europe. Markets will keep an eye on the speeches from the ECB’s Praet and Constancio and also Fed governors Williams and Bullard. We expect the ECB speakers to take a guided approach as their meeting for the June announcement is ongoing. The Fed speakers wont question a June rate hike (publically) but with the political unrest in the U.S there will surely be second thoughts on a hike – all in all any movement in the rates would be surprising based on the comments.
Have a good weekend!