FXTM weekly round-up: The busiest week of the year

It could be fair to say that this has been the busiest week of the year for financial markets.

The trading week kicked off with a sense of uncertainty, after Donald Trump sowed chaos over the weekend by pulling out of a joint statement with the G7 allies.

History was made on Tuesday as Trump became the first sitting American president to meet face-to-face with a North Korean leader. However, financial markets offered a fairly muted response to the historical Singapore summit, despite the US president describing it as being “better than anyone could imagine”.

In a widely expected move, the Federal Reserve raised US interest rates by 25 basis points on Wednesday evening. Some investors were even caught off-guard after the central bank projected two additional rate hikes in 2018.

On Thursday, the ECB surprised markets by announcing that it will end its QE programme by the end of this year. In a dovish twist, there was also a pledge to keep interest rates at ultra-low levels which sent the Euro plummeting.

Dollar bulls were injected with fresh inspiration near the end of the week after US retail sales exceeded market expectations.

With speculation likely to heighten over the Fed raising rates faster than expected, strengthening of the Dollar could remain a dominant market theme.

In the commodities arena, Oil prices edged slightly higher ahead of next week’s OPEC meeting, while Gold retreated from a one-month high amid an appreciating Dollar.

The upcoming trading week is likely to be dominated by central bankers as Fed Chair Jerome Powell, ECB President Mario Draghi, BOJ Governor Haruhiko Kuroda and RBA Governor Philip Lowe will be in the spotlight. The main event risk for the Pound will be the BoE policy meeting, which could offer investors insight into rate hike timings this year.

Much attention will be directed towards the OPEC meeting, as the outcome could dictate oil’s trajectory this month.