The G7 Summit comes into focus to finish out the week. One week after announcing tariffs on the EU, Canada and Mexico, President Trump will meet with leaders from Canada, France, Germany, Italy, Japan, the UK and the European Union. Tensions are due to run high, which also means the market’s low expectations should not create any surprise currency moves.
Ahead of next week’s major central bank meetings and key data releases, there have been some interesting moves in the markets with the euro/U.S. dollar currency pair in particular showing relative strength. Although the Federal Reserve is almost certain to raise interest rates next week, it is the European Central Bank which all of a sudden is looking to be the more anticipated meeting.
As jitters over Italy’s political situation calmed down yesterday, risk-sensitive assets rallied across the board. Haven bonds and the yen fell, while stocks rose sharply amid hopes that fresh elections may be avoided.
Today has been a little light on the data front with the exception of Canadian employment figures, which were released earlier. Headline employment had been expected to have risen by around 17,800 last month, while the unemployment rate was seen steady at 5.8%. While the unemployment rate did remain at 5.8%, the headline figure disappointed as employment fell by 1,100.
The Aussie could extend its gains next week unless the RBA’s monetary policy meeting minutes on Tuesday convey a surprisingly dovish message or the Australian employment numbers on Thursday disappoint expectations. From the United States, next week’s key data include retail sales on Tuesday and industrial production and some housing market data on Wednesday.