The U.S Dollar is trading in familiar ranges ahead of a week slated to be full of data and central bank decisions. Investors are keeping a cautious approach across the globe as they await elections in Europe and clarity over monetary policy. Nevertheless, the markets could be open to some risk-appetite as the Chinese economic outlook was upgraded by the senior officials as well as investment banks such as Goldman Sachs. Already some commodity-based currencies such as NZD and AUD are experiencing some upward movement. Oil is down below $48.0/barrel, which is keeping momentum subdued.
Today could be a quieter day in comparison to what is ahead in addition to the Fed meeting. The Netherlands will have its general election on Wednesday, Banks of England and Japan make decisions Thursday, all meanwhile data pours in to either make or undo the case for gradual hikes for the rest of the year. The dollar will be subject to changes as we have already seen a loss of half a percent for the Bloomberg Dollar Spot Index since Friday.
The Euro is trading at its highest level since February 9th after mounting a recovery aided by the European Central Bank’s optimistic outlook for growth and inflation. Although the political atmosphere remains heavy and worrisome, the fundamentals of the Euro-bloc’s economy are advancing enough to convince ECB officials that their role in regards to direct intervention may be coming to an end. QE is working, it’s now lower per month, and the ECB is not planning on expanding it.
The Pound gained some ground over the weekend following developments that could allow Prime Minister Theresa May to invoke Article 50 to start the official Brexit process as soon as tomorrow. The House of Commons is set to vote today on accepting amendments made by the House of Lords to the Brexit draft. The Conservatives are expected to lead the charge and give the PM the power she needs.
Nevertheless, we believe Sterling will be under pressure and bound to fall as Scotland readies itself to begin its own process to have another referendum on Scottish independence from the United Kingdom. It is realistic to believe it would be a close vote geared towards separation because the population has expressed concerns with a UK/Scotland out of the EU.