- The single currency starts the week a little softer as traders and investors mull over the results of the French election. The country is facing a political deadlock, with both the left and centre coalitions making ground pushing Marine Le Pen’s far right National Rally party into third. With no party able to form an outright majority, France is going to have a hung parliament adding further uncertainty to French assets and the euro. EURUSD has lost some ground after posting gains Friday afternoon after US Non-farm Payrolls came in above expectations.
- It’s a quiet week ahead for UK data, with just Monthly GDP data due to be released on Thursday. The data is likely to show that the UK economy is on course for another healthy gain in the second quarter. An expansion of 0.2% in expected in May following no growth the previous month, which is consistent with the recent rebound in retail sales.
- The US economy and Fed monetary policy remain the focus for markets, and investors will be looking this week for further clues on when the central bank will be able to deliver its first cut. Thursday sees the release of the June CPI report, with analysts expecting headline CPI to rise 0.1%, weighed down by a large seasonally adjusted decline in gasoline prices. Fed Chairman Jerome Powell delivers his semi-annual monetary policy report to the Senate Banking Committee over two days, kicking off tomorrow and concluding Wednesday. The odds of an early rate cut have increased after last week’s labor market data and a dovish Powell would keep a September cut very much alive.
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