The U.S. dollar appreciated during the week as the tax reform inched closer to reality. Fundamental data in the U.S. was positive for the currency but hourly wages again disappointed by coming below expectations. Given the importance of inflation indicators inside the Fed stagnant wages could make it hard on the U.S. central bank to keep raising rates in 2018.
The central banks’ inability to achieve their inflation targets led some analysts to argue for modifying these targets. Are they inappropriate in a modern, globalized economy? Should central banks change them? Or should they conduct a more rule-based policy, as John Taylor argues? How would such moves affect the gold market?
U.S. equity markets are expected to open slightly higher on Tuesday following a flat and rather slow start to the week. A rare piece of good news for the UK this morning as the Bank of England announced that all banks passed its stress tests for the first time since the financial crisis.
Chinese data shrugged off as equity markets edge slightly lower; sterling under pressure as pressure on May mounts; central banks event sees Fed, ECB, BoJ and BoE heads join panel discussion; German GDP and inflation data get us off to an underwhelming start.
After yesterday’s big sell-off, a lot of people would be wondering if this is the start of something big, a long-overdue correction or a mere short-lived pullback in what has been a very strong bullish trend for the stock markets.
The EUR continues to decline as Draghi avoids offering new clues; will traders be as receptive to Yellen commentary as the term comes to an end? Traders eye Governor Stephen Poloz's comments for BoC rate clues.