US in focus

May 25, 2018

We could be in for choppy end to the week, with significant data and geopolitical activity likely to cause volatility.

The EUR/USD strengthened overnight as the dollar showed signs of a slowdown in momentum. The pair hit a low of $1.16900 fairly early before beginning its rocky ride upwards. It eventually peaked at $1.17495 but was only able to hold onto that high for a brief period. It pulled back slightly from those highs where it is currently trading at $1.17187. The GBP/USD followed a similar pattern to the euro. It dropped to lows of $1.33490 reasonably early then began its march up. This momentum spiked when the UK Retail Sales figure was released and easily beat expectations. The pound rallied to highs of $1.34213 but gave up some of those gains throughout the rest of the trading session. It is currently trading at $1.33815.

The Dow went on a wild ride last night as the cancelled US-North Korea meeting gave markets an excuse to sell off. The Dow opened at 24,862.00, fell to 24,751.00 and then up to a session high of 24,872.13. This is where things went pair-shaped. Over the next several hours, it plummeted to lows of 24,589.23. During the hour that it hit those lows, it the proceeded to rally over 130 points in a remarkable turnaround.  The rally continued during late trading. In early morning trading, the Dow sits at 24,817.00. The Dax began the session in promising fashion, hitting a high of 13,002.20 early. However, it was dragged down during the Dow sell off. The Dax tumbled to lows of 12,795.20. It bounced off those lows to close at 12,883.10.

The day ahead could present some volatility to markets, with the US Core Durable Goods Orders data set for publication. Fed Chair Jerome Powell is also set to speak. As we head into the weekend, political events such as the US-North Korean meeting may make markets for susceptible to volatility. We could be in for an interesting end to the week. Other data set for release today includes:

Australia – RBA Assistant Governor Michele Bullock speaks

Europe – German Ifo Business Climate, ECOFIN Meetings, German Buba President Jens Weidmann speaks

UK – Second Estimate GDP, High Street Lending, Index of Services, BoE Governor Mark Carney speaks

US – Durable Goods Orders, Revised UoM Consumer Sentiment & Inflation Expectations, FOMC Member Raphael Bostic speaks


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