As I write this, the UK election results have already been declared with Labour winning a majority- this generally kept the Pound stable and didn’t add too much volatility into the market- the larger risk was the French elections- after the first round it seemed like the right wing parties didn’t garner as much support as initially expected, and looking at the exit polls of the second round, it seems France will have a hung Parliament with the Left-green alliance taking the lead, I am expecting the Euro to strengthen following the final result of this election- with EURUSD to potentially move up, GBPEUR may still be stable above 1.18 but there might be a reason to head back to the 1.17’s now, seeing as though the initial Euro weakness was due to the elections being announced.
Fortunately, we now have politics out of the way until after the Summer, so we can concentrate on macroeconomics again, this week is relatively quiet from a data perspective. On Tuesday we have Fed Chair Powell’s testimony, which I am not expecting to be a volatile event, but if we do get any mention of interest rate cuts we could see some USD volatility, however, this is pretty unlikely in this event. On Wednesday we have another Powell speech where the same rules will apply, again, I am not expecting anything too volatile from these speeches this week. Wednesday’s most volatile event will be the England match in the evening!
On Thursday we have UK GDP numbers alongside balance of trade and industrial and manufacturing production- a relatively busy morning- hopefully following a positive England win from the night before- this will be followed by US inflation numbers where we are expecting a drop of 0.2% in US inflation which will definitely add more reason for the Fed to consider interest rate cuts after the Summer and potentially weaken the Dollar.
On Friday we have US PPI data which is expected higher at 0.1%- this wont be enough of a move to cause any volatility in the market- generally speaking Thursday will be the most volatile day of the week, aside from that it should be relatively quiet.