The week ending the 16th June saw the EUR/USD pair achieve a yearly high at 1.1295 o0n the 14th but ended with the figures flat at 1.1197 after the announcement of inflation figures from the United States that seemed disappointing to all concerned, including, many suspected, those actually making the announcement. This came after a week in which the US Federal Resave continued to strike a hawkish tone, especially with its unveiling of a twenty-five basis point rise. The Fed Reserve, showing a commendable commitment to seeing the bright side in a climate where such views are hard to find, focus on the improving US labour market. This is undoubtedly an important factor though it could really be set against increasing political turmoil and softer than expected economic results remains to be seen. In particular, the continuing controversy surrounding President Trump and investigations into the allegation that he attempted to obstruct justice during the Comey affair seemed set to bring about stagnation in US economic policy, especially in those areas which caused confidence to burgeon in the US dollar in the first instance. It will be hard to for the President to keep his manifesto promises about tax reforms and large scale infrastructure investment now that he is under investigation by a special prosecutor and even his own party is beginning to cautiously distance itself from him. Further adverse signs for the dollar came as other central banks indicated that they would be looking towards a normalization of policy in the immediate future, the Bank of Canada leading the way and even the Bank of England making hawkish sounds, despite the looming Brexit negotiations and the UK’s own plentiful political turmoil.
Friday the 16th June saw the announcements that further confirmed the somewhat gloomy prospects for the US dollar, at least in the immediate future. While both housing and building permits were up, the degree of the increase was far lower than had been expected by most. Perhaps most worrying for the dollar, consumer confidence had fallen to levels not seen in this presidency. The President further set the cat among the pigeons by announcing in a speech in Florida that he would be seeking to roll back the deal with Cuba achieved by his predecessor’s administration. Observers emphasised that the reforms to the deal would be small scale and cosmetic, and thus unlikely to have lasting consequences but in the present state of the US, it seems that no announcement can be small enough in scale not to have fairly hefty political consequences. In contrast, the Euro seemed buoyant especially in light of the news that Greece had, after its extended crisis, at last, come to a deal with its many creditors on the next stage of its equally protracted bail-out.
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