The US Dollar continued its decline last week, which has seen a large amount of bullish positions starting to unwind. The Dollar Index (DXY) fell 1.2% to close the week at 97.14.
The Euro stayed steady and took advantage of a weaker Dollar, with EUR/USD pushing higher on the week, even though the Eurozone CPI fell to 0.8% YoY, well below the ECB’s 2% target level. However, the pair closed just below the 1.1170 level – much higher than last week’s 1.10 weekly close.
The Pound was on fire last week and the most volatile currency by a long shot, this was due to a potential EU/UK deal being announced. GBP/USD took off and finished 2.6% higher and closed just below 1.30, whilst EUR/ GBP fell 1.4% to 0.86.
A quiet week on the Yen front, it had a very steady week and traded mostly sideways, USD/JPY closed at 108.38.
AUD & NZD
A fairly positive week for the Aussie and the Kiwi, both finishing up around 1%.
Had an almost bulletproof week last week and showed us that the clear risk is for more upside and a potential push to new highs. The S&P 500 finished the week 0.6% higher at 2989, the DAX gained 1.6% to close at 12652, however given Pound strength, the FTSE 100 finished 1.3% lower at around 7150
The Week Ahead
The US/China negotiations will receive slightly less attention from traders after the weekend as all eyes will be on the EU/UK developments. The UK parliament has a very busy week on its hands after the UK’s PM Boris Johnson was unable to achieve a meaningful in the House of Commons on Saturday – a likely very volatile week ahead for both GBP and EUR.
On the macroeconomic front we have the all-important ECB interest rate decision on Thursday, which is expected to remain unchanged with the press conference the main focus. We also have Global Manufacturing and Services PMI releases on Thursday, which can have a impact market volatility.