Good morning,
Today sees the start of a hugely important week, geared towards concluding the key currency topics that have prevailed throughout 2019.
Things kick off Thursday with three key events on the radar:
European Central Bank meeting
The ECB has been a hot topic this year following the somewhat controversial passing of the baton to Christine Lagarde, and the whopping stimulus package for her to manage. They will officially meet this Thursday for the first time under Lagarde’s chair, and markets will be keenly anticipating her strategic outlook with any hint of forward guidance.
The UK General Election
With the voting taking place throughout Thursday and polling stations closing late in the evening, the lead up will be crucial in pound positioning. We have seen quite the run in the pound, with markets knocking at the door of 1.19 on the Euro and 1.316 upon market open this week. There is an underlying concern that the pound has borrowed some post-election appreciation with the classic ‘buy the rumour, sell the fact’ tendency, however, the consensus still backs a Conservative majority outcome following the weekend opinion polls and a likely pound positivity for this.
US Tariff Deadline
Trade negotiations continue, with the hopes of a resulting “phase one deal” at the end of this week, and cancellation of new tariffs on China. This would be a largely positive move in the almost year and a half ongoing trade dispute, which would alleviate many of the concerns around global slowdowns and recessive indicators. Emerging market currencies will be strongly tracking the developments this week between the US and China, and will be very sensitive to any sway in sentiment here, particularly the South African Rand.
Outside of the highlighted events, the week will start slow, with positioning on the relevant currency pairs in the lead up to the end of the week.
A thin data day today will be followed by the UK GDP reading and German ZEW business confidence tomorrow. Normally these are quite impactful market movers, however, they may find themselves in the shadow on the large risk events to close the week.
Have a great day.