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.
After the thin volume by high volatility of last week we could well be looking at more of subdued start to the week as volume returns and US traders returning to their desks try and decipher last week’s moves.