Dollar bulls feasted on reports, stating that US President Trump has met with notable inflation Hawk, Kevin Warsh, for the Fed Chair position. Previously, the candidate has expressed his criticisms of the Fed’s balance sheet, as well as declaring his views on increased focus on productivity. The greenback saw a bid as reports were digested with the DXY breaking back through 93.00, recovering losses on the day.
GBP/USD traded back below the highs printed on September 14, where markets saw a hawkish BoE rhetoric post decision. Offers come in the wake of source comments, on Wednesday from Brussels, stating that UK PM May ‘took dictation’ from the European Commission when she announced her intentions to pay a Brexit divorce bill, during her speech in Florence. Carney’s rhetoric in the 20th Anniversary of Independence from the BoE was largely rebuffed by markets, with a lack of monetary policy commentary. GBP continued to suffer on Friday however, as the UK GDP miss saw EUR/GBP lookback toward 0.8850 and GBP/USD testing Thursday’s lows.
Global elections dictated the start of the week, where EUR suffered following the weekend results despite Chancellor Merkel being set for a fourth term. Merkel’s CDU/CSU performed weaker than expected and has now undertaken coalition discussions.
Further weight was put on EUR as, EURUSD was heavily offered as markets were led by Trump’s Tax plans. USD strength has been the theme of the week, with some marginal position flattening toward the end of the week. Fed Chair Yellen did not fail to deliver on Wednesday, as much of the anticipation of further opening up December was evident.
NZD was also heavy following their election results, and in line with Germany, despite a victory for the National Party, a majority was also not secured. This places the next government at the hands of New Zealand First Party’s leader and effective ‘kingmaker’ Winston Peters, who is all too familiar with this obligation having supported both the National Party and main opposition Labour in past governments.
The Canadian data has struggled following the unexpected rate hike earlier this month, with comments on Wednesday spurring further Loonie unwinding, as BoC Governor Poloz stated that an appropriate path for rates is very difficult to know because of a number of unknowns around inflation outlook. Friday’s Canadian GDP fell to flat, completing a week of gains, where USD/CAD rose from 1.2330 to highs of 1.2490.
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