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Currencies

Dollar loses confidence of investors

Not so long ago a rise in US bond yields, over and above those of international rivals, was enough to draw a steady bid for the Dollar from the foreign exchange market. That has changed over the last four months, to the consternation of many, with US two year bonds now offering their highest yield premium relative to their German rivals than at any other time in recent history while the Dollar continues to fall. While US authorities may pay lip-service to a stronger dollar, America First equates to a weak dollar policy. Moreover, concerns over the likely increase in US government debt that would be required to finance this spending over the coming decades may explain the rest of the greenback’s weakness. We expect EUR/USD bullishness to continue.

Currencies

Dollar buoyed by hawkish Fed

Euro ended the week on a lower note as data from Eurozone i.e. consumer confidence, Manufacturing PMI, Services PMI and Core came in below expectations and as anticipation over the future rate hikes from the Fed began to gain in credence. Eurozones annual inflation rate came in at 1.3% in January 2018, down from 1.4% in December 2017, which prompted Eur/usd to shed further ground. In the coming week, ECB President Draghi is supposed to testify before European Parliament Economic and Monetary Affairs Committee on Monday and also the new Fed Chief Powell is set to testify which would also give indication on the future plans of ECB. Moreover, the dollar remains supported as markets continue to price in the odds of the Federal Reserve raising interest rates four times over the course of 2018. With US GDP around the corner and increased expectation of rate hike, euro will take take a breather.

Luxury brands should devote particular attention to millennials and Chinese consumers in the coming years, according to True-Luxury Global Consumer Insight, the fifth edition of an annual study by The Boston Consulting Group (BCG) and Altagamma, presented today in Milan. Millennials are the generation that will contribute the most to the market’s growth: some 130%, to account for 50% of the market in 2024. Chinese consumers represent the nationality driving the most growth: about 70%, to account for 40% of the 2024 market. The overall luxury goods industry, including products and services, is worth approximately €915 billion today and will reach about €1,260 billion in 2024.

Regional markets’ main indices witnessed a mixed performance last week, driven mainly by lack of catalysts and lower oil prices.

The DFMGI was on top of the losing team, having a weekly decrease of -2.4%, adding to its YTD performance to be down by -4.8%. The index’s second heavy weight stock, Dubai Islamic Bank (DIB), mainly drove the decrease,  as it went ex-div. TASI came in second during the week with losses of -1.5%, driven mainly by weaker oil prices, where crude oil ended the week at USD64.37  per barrel, which translated  into a weekly  loss of -4%.

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