The new trading week started on a slightly calmer footing as traders try to evaluate the latest FED’s meeting and are awaiting the upcoming macroeconomic reports from all over the world.
The Federal Reserve delivered its second rate hike on Wednesday as was widely expected. Importantly, it didn’t lower its projected rates path which supported the dollar. Janet Yellen also sounded upbeat during her press conference, despite a recent streak of weaker data. That means that the rebound of the dollar could continue in upcoming week, especially given the lack of important data from the US economy. It doesn’t mean, however, that this week will be much calmer. Some crucial data is expected from the Eurozone and Canada, while two central banks from G10 decide on monetary policy.
The scale of LREM’s projected win means Macron will enjoy an absolute majority even without the support of alliance partner Francois Bayrou and Modem, lending him a freer hand for reforms and room for a government reshuffle should he choose to carry one out. Modem currently has two ministers in the Cabinet. The outcome should be seen as mildly positive for the euro. The currency, however, has shown almost no reaction to the news as it was widely expected. The next step for the euro is an election in Italy that will be held no later than 20th of May 2018.
Looking at the breakdown of the German DAX (DE30 on xStation) we could notice that all stocks, except RWE, are being listed on the green side in early European trading as the new week unfolds. Moods abroad were rosy as well which might feed into European desks. The DAX is up by 0.83%, the French CAC40 (FRA40) rises almost 1% following the fallout of the second round of parliamentary elections which saw Macron solidifying his power. Moreover, the Eurostoxx50 (EU50) picks up by 0.97% and the FTSE100 (UK100) goes up by 0.8% despite another awful event which took place in London overnight.
Antipodean currencies were in the spotlight early in the morning. The New Zealand dollar could draw the most attention this week as the RBNZ meeting is scheduled on Wednesday. So far we’ve known pretty stellar macroeconomic releases which have propped up the kiwi. The Antipodean currency was one of the best performing among G10 basket in the recent weeks. But the latest revelations from Moody’s that downgraded Australian main banks to AA3 from AA2 gave the Aussie a little setback.