The Week Ahead – It is All About Politics

The week ahead is expected to be quiet as economic events from biggest economies are not due to release this week. The previous week has once again confirmed the strength of the US economy with higher than expected employment data that was released on Friday. The BoE upgraded its growth forecast for 2018 and 2019 and as a result The British Pound has been caught between BoE announcements, article 50 invocation and on the other side of the coin, recent volatility of the US Dollar.

Yes, Donald Trump policy actions are currently the strongest market mover. The reopen conflict between the US and Iran lifted crude oil prices and obviously drops concerns over global economic stability.

The ongoing rumors of Trump’s plans are standing in the Que. Trump is expected to order a review of Dodd-Frank act, the same regulation that was implemented after 2008 crisis and is supposed to prevent the unregulated financial markets. The new president is not about to stop there and continues to ease financial regulation. Banks stocks are thrilled after Trump’s deregulation announcements. JP Morgan, Goldman Sachs, Bank of America, Morgan Stanley and other banks stocks were among gainers on Friday.

Additionally, Trump protectionism policy supports the radical immigration rules that create tension among major countries. And please, do not forget the currency war, US vs China and US vs Japan. Early last week, Trump said, “Look at what China is doing. You look at what Japan has done over the year. They play the money market, they play the devaluation market and we sit there like a bunch of dummies.”

As long as Trump is the president, the currency war will be at center stage.

Apart from politics, we have the Reserve Bank of Australia that will release its rate decision on Tuesday at 3:30 GMT. The Australian dollar rally is certainly could not be ignored by the RBA members. A rate change is not expected, yet, we should closely watch for any signals from the Australian central bank.

The close neighbor, New Zealand will join Australia to announce its interest rate on Wednesday 20:00 GMT. Expectations are for RBNZ to hold rates unchanged, however, due to rising inflation figures in New Zealand, markets will pay close attention to anticipate the central bank next moves.

Check out our real-time Economic Calendar