Volatility Mounts As All Eyes Are On The G-7

Volatility Mounts As All Eyes Are On The G-7.

This promises to be an interesting few days with some market moving announcements across the board, but especially toward the end of the week with Day 1 and Day 2 of the G-7 meeting.

The USD looks to be gaining steam again and momentum is building. After a few weeks of easing off, the risk trends have run out of gas. It appears the Greenback may be back in control as we have seen it the last 18 months. By Friday we should have some clearer direction. I believe the G-7 meeting outcome will confirm this.

GBP – Will It Hold Up Under Pressure?

The Cable energized itself yesterday at the start to the week as the British economy awaited the CPI report. This morning, however, the report shows UK inflation rising by less than expected with the UK Consumer Price Index coming in at 0.3% (YoY) as opposed to the 0.5% expected. The Core Consumer Price Index came in at 1.2% instead of 1.5% expected for April. This marks the first decline in the rate since September 2015. The sterling reacted with a drop as worse than expected inflation data came in, but it is still overall up for the day against its major counterparts.

Commodity Pairs – Sell Off?

The commodity pairs are looking stressed, but keep fighting to gain against the Greenback. The Aussie struggles as banks hold firm with low interest rates and further cuts threatened down the line. The Canadian Loonie is controlled by oil and easing off of the terrible fires the last few weeks has helped just a little. Friday’s core retail and CPI reports out of Canada will shed more light on the CAD outlook. Watch for price action about 36 hours ahead for a possible glimpse as to what may be expected.

Focus On The Greenback

The USD will be in the spotlight again Wednesday as the FOMC meeting minutes are released. There is as good as zero chance of a rate hike ahead of the political elections. Even though the market has factored that in, we still expect to get some massive swings when the release confirms what everyone was expecting anyway. This phenomenon never ceases to amaze to me.

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