Market steadies after release of data

Last Thursday, the British Pound slipped to a one-week low against the US Dollar after the Bank of England report showed interest rates were unlikely to rise within the next two years and predicted a bigger than expected short-term slowdown in consumption.

BoE stated that rates could rise towards normal levels over the next 3 years if Brexit talks continue to go smoothly, but said that it had been overoptimistic about economic performance this year. UK data showing weaker than expected industrial output and a widening of Britain’s trade gap also weighed on the Sterling, which has struggled to break past the “psychological” $1.30 mark.

Last Friday, the US Dollar traded below an eight-week high against the Japanese Yen, with the near-term focus on whether coming US economic data would provide the catalyst for further gains in the greenback. Meanwhile, Thursdays’ data showed that new applications for US jobless benefits fell last week while producer prices rebounded strongly in April 2017, pointing to a tightening labor market and rising inflation that could spur the Fed to raise interest rates in June 2017.

On Thursday as well, US and European Stocks fell, along with the US Dollar, while US Treasury Yields reversed earlier declines, as political uncertainty in the United States sent investors in search of safer investments like Gold and the Japanese Yen.

Investors were concerned about developments relating to the firing of FBI Director James Comey by US President Donald Trump. Trump’s decision had been building for months, but a turning point came when Comey refused to preview for top Trump officials his planned testimony to a Senate panel, a decision that was considered an act of subordination by Trump and his aides.