With the lack of economic data on Friday it was perhaps no great surprise that Trump/Russian ties gripped financial headlines again. This compiled with headlines regarding the White House spokesman Sean Spicer resigning continued to raise concerns around the political stability of the White House. It also appears to have dampened any hopes for a quick turnaround on Trump’s financial stimulus and tax reform agenda, which is one of the reasons the dollar has given back all of its post Trump election gains. This uncertainty resulted in gold surging to four week highs, while the dollar tumbled to a 13 month low against a basket of major currencies. The 10 yr US Treasury note yield also hit a 3 week low. US stocks however remained resilient against political headwinds as strong earnings and lower dollar continued to underpin stock market performance.
The falling dollar couldn’t help edge up crude oil prices which tumbled nearly 3% on Friday. OPEC and non-OPEC members are scheduled to meet today where expectation is rising that no deal on Libyan and Nigerian cuts will be reached. A further fall in oil prices could cause more headaches for Central Bankers going forward, as the majority of them are struggling to get a grip on inflation figures.
Over the weekend, the IMF cut both UK and US growth forecasts while raising its forecast for Europe. While the majority of traders will not pay much heed to the update, it does help highlight the general feeling that the worst is over for the Eurozone, while Britain now looks to be catching a cold. Data out earlier from the Eurozone showed Frances manufacturing PMI output accelerating to its fastest rate in 75months, however their service sector growth slowed to 55.9. Both German PMI figures were down from last month, while the same Eurozone figures also stumbled as the stronger euro perhaps is starting to weigh on trade.
Data is light for the remainder of the day with PMI data from the US followed by existing Home Sales due this afternoon. We will have to wait until Wednesday to get any data of note out with AUD CPI due in the early hours, followed by UK Q2 GDP estimates and the FOMC Statement to round things up.