Dollar Is King Again
As predicted, the Bank of England kept interest rates on hold yesterday and Greece succeeded in making their loan repayment to the IMF. The Pound is starting to come under attack from the Dollar and we have seen yet another increase in volatility in Sterling on the back on heightened uncertainty about the forthcoming election and the deal between Royal Dutch Shell and BG Group.
Having made its repayment, Greece is still never far from the headlines and whilst it is currently thought that a deal on the bailout loan will be reached by the end of the month, there must be a compromise. Tsipras has agreed to continue fiscal austerity but wants the extent of the austerity to be reduced.
In the US, the Dollar strengthened hugely against the Pound and Euro as minutes from last months Fed meeting were released showing that there is a split of when interest rates should be hiked. Several members of the FOMC felt economic data warranted a June lift-off and while other were not of this opinion, it probably means that September is now a more likely candidate.
The day starts with various production data releases from the UK, later on we have the UK’s GDP estimate and finish the week with hopefully a bit more guidance from the Fed as to when interest rates will be hiked.
Have a good weekend!