We saw consolidation across global markets throughout the trading day on Friday as some profit taking flow ahead of the weekend and a big event risk week hit the market. The dollar finished the day lower against most of the majors with the Dxy finishing the week trading around 91.60, off of last week’s high at 92.00 but still looking bid. The equity markets had a relatively quiet day with most indices finishing nicely in the black but not by any huge levels and the US 10 Year bond yields continued to trade just south of 3%. We did see a stronger print in the quarterly US GDP data and don’t think this will come as too much of a surprise to the Fed.
There does appear to be a continuation of smoothing of Geo-Political tensions as the historic meeting on the Korean Peninsula showed last week. The markets seem to have calmed in recent weeks, however there are some potential storm clouds on the horizon in the form of the US – Iran nuclear deal (which President Trump has made it clear he is unhappy with) and the next round of Nafta negotiations which are due next week. Both of which have the potential to add significant volatility to the market particularly for Cad traders.
It’s a huge week in terms of fundamental economic data and central bank action with both the RBA and the Fed meetings due and some significant US numbers coming out culminating in Friday’s employment numbers. Today should see relatively smooth trading conditions with only second and third tier data due and both China and Japan enjoying holidays in the Asian session.