Geopolitical Risks Continue to Weigh
Last week we continued to see the familiar patterns of risk aversion. Rising tensions in the middle east weighed heavy on the markets and the fear of further escalation put the markets in a cautious mood.
The dollar reversed the previous week’s losses as the dollar moved on safe-haven flows. The DXY still remains firmly in an uptrend gaining 0.4% last week.
The Euro seems to be being pushed from pillar to post but remains firmly in the grip of continuing poor data from the Eurozone. The PMI disappointed along with Christine Lagarde beginning to add fuel to the cautious economy fire.
The pound had a quiet week with mixed economic data and next week we have the BoE announcement. Even with UK inflation remaining stubbornly high the guidance from the BoE will be key.
Commodity currencies struggled once more (I know we keep saying it) as further risk off dominated the week and the USD took the safety flows. AUD and NZD remained relatively stable on the week, but CAD lost around 1%. USDJPY hit 150 again but retreated to close the week flat.
Oil is having a very volatile time as middle east tensions continue to prevail vs risk off general markets. By the end of the week WTI had retreated 3.6% lower.
The week ahead is a difficult one. Further escalations in the middle east over the weekend will continue the risk off theme but we also have a large amount of data releases.
We have interest rate announcements from BoJ, BoE and the FOMC along with US GDP and CPI data. With the new month starting this week we also have Friday Non-Farm Payrolls to look forward to.
Weekly Majors Market Performance
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