Finance World

Currencies

End QE bullish for Euro

The European Central Bank will shut its hallmark bond purchase scheme by the close of the, taking its biggest step yet towards dismantling crisis-era stimulus a decade after the start of the euro zone’s economic downturn. Despite signs that the single currency area is going through a soft patch at a time of rising protection risks, the ECB said it would wind down its bond purchases over the next six months. The ECB is currently boosting the eurozone money supply by buying €30 billion worth of bonds each month, but this will be tapered to a monthly €15 billion after September and brought to a halt at the end of 2018. We believe the correction is over and EUR should bounce back from these levels.

The combination of renewed dollar strength, a Saudi/Russia proposal to raise oil production, the increased risk of a US/China trade war, and improved crop conditions in the US all helped trigger a third consecutive week of losses for the broad-based Bloomberg Commodity Index.

Currencies

Uncertainty to spur safe-haven demand

Yen is expected to pick up some strength on the back of safe –haven demand as the week is flooded with key events which would drive the volatility in the markets. The major event risk next week will be the highly anticipated meeting between President Trump and North Korean Leader Kim Jong Un. Also, all eyes will be on the US Federal Reserve and the ECB meeting next week as the two central banks are expected to take further steps toward policy normalization.

The Central Bank of the UAE (CBUAE) announced that, effective Thursday, 14 June 2018, it will raise interest rates applied to the issuance of its Certificates of Deposits in line with the increase in interest rates on US Dollar, following the Federal Reserve Board’s decision to increase the Federal Funds Rate by 25 basis points at its meeting of today.

International markets ended last week’s trading on a mixed note with trade tensions and the G7 meeting in Canada being the main focus for investors.