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US Open Preview – Dollar enjoys gains as attention shifts to geopolitics and monetary policy
June 11, 2018 12:26 pmVideo
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Here are the latest developments in global markets:
Day ahead: Focus switches to Geopolitics and monetary policy
Monday’s economic calendar will be relatively quiet in terms of major data releases in the remainder of the day, giving some time to investors to prepare their positions ahead of high-spot events later this week.
Early in the Asian session, traders will see the release of electronic card retail sales out of New Zealand at 2245 GMT, while at 2350 GMT Japan will issue PPI readings.
However, since the above data have a small capacity to spread volatility to the markets, the focus will turn to Singapore where the US President, Donald Trump, will be holding a historic summit with the North Korean leader, Kim Jong Un at 1700 GMT, a proposal made unexpectedly by the latter but initially cancelled by Trump. The two leaders, who will finally meet in person after exchanging war of words in 2017, will push efforts to find a common ground on North Korea’s future nuclear program after Kim showed the willingness to give up its nuclear weapons. Should the discussion prove fruitful, US trade restrictions could turn softer against the isolated peninsula, while the Korean War could also take a formal shape. However, if the meeting fails to deliver progress, the US could take a stricter stance against North Korea, bringing a fresh wave of uncertainty to the markets. Note that this would be the first meeting between a sitting US President and a North Korean leader.
Meanwhile in the US, the Federal Open Market Committee is scheduled to start its two-day policy meeting on Tuesday, with analysts widely expecting policymakers to hike interest rates for the second time this year and remain hawkish on the face of the US improving economic performance. The European Central Bank and the Bank of Japan will also decide on interest rates this week, on Thursday and Friday respectively, however, no rate rises are anticipated to be approved in these cases. Yet, the ECB policy meeting could attract a greater attention as the central bank could give direction on its QE program that expires in December. Particularly analysts wait to see whether policymakers will end or expand their bond-buying program after its expiration day.
Trade headlines would remain under the spotlight as the G7 meeting in Quebec Canada during the weekend was unable to unite the US with its closest allies on the trade front, with investors now looking for further clues to see whether rising trade tensions could unleash a global trade war.
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