The main theme this week was the Group of Twenty summit, or more specifically the meeting of the US and China leaders on the sidelines of the summit. The US dollar ended the week either flat or a little higher versus other majors as traders were reluctant to risk ahead of a major event. Yet it seems they were optimistic enough for riskier commodity currencies to become clear winners this week despite the threat of interest rate cuts from their respective central banks.
The week started with optimism about the meeting between US President Donald Trump and Chinese President Xi Jinping this weekend. Yet as the meeting was coming closer, the optimism was evaporating, especially after officials from both countries made remarks, which were demonstrating a tough and uncooperative stance. But news from the meeting coming out today seems positive so far, which undoubtedly should have a strong impact on markets when they reopen.
Comments from Federal Reserve officials allowed the dollar to rebound somewhat. Fed members suggested that markets exaggerated dovishness of the central bank and that expectations of two interest rate cuts this year are unwarranted. Yet it seems that market participants were unconvinced by the comments as the CME FedWatch page shows basically a 100% chance of a cut at the next meeting in July.
EUR/USD ended the week flat at 1.1369. USD/JPY gained from 107.30 to 107.92. USD/CAD declined from 1.3212 to 1.3088.
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