Submitted by Shant Movsesian (RANSquawk) and Rajan Dhall MSTA
Weekly FX Outlook:
Politics dominate yet again, as focus on Comey testimony set to determine Trump and USD fate. Fed minutes and OPEC meeting on the same day with the BoC thrown in! EUR on the front foot and leading the pack as growth and inflation stats heighten tapering expectations, greenback flagging.
Late Thursday, social media released a video suggesting the ex-FBI director denied any experience of interference to any ‘bureau’ investigations, but questioning was not inferred on Donald Trump. As such, the president is not off the hook – far from it. Thin market conditions at the time produced some sharp USD moves to the upside, but have been all but reversed in full as US Treasury yields remain on the heavy side.
Based on economic considerations, where the data has been tailing off of late, politics now ‘overlap’ as delays on tax reform will be seen to be exacerbated by the allegations on the head of state. Next week’s schedule picks up midweek, with the Fed meeting minutes making for a volatile North American session at the very least. The FOMC are likely to see recent softness (in growth, inflation and wages) as transient – a popular word of late – so expectations over a June hike may have receded from 90%+ to 74%+, but the yield curve has been wilting in the mid curve to signal market focus beyond next month and 2017.
Of the data releases seen, Friday’s Q1 GDP seconding reading is standout, along with real consumer spending and the price index. Durable goods are also out at this time, with Q1 corporate profits also noteworthy. The day before we get the latest trade data, with housing data and the Markit PMIs set to be ‘lost’ in the Trump and Fed circumstance.
This post was published at Zero Hedge on May 22, 2017.
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