The week ahead : OPEC Meeting & Comay testify on top of events (22-26 May 2017)

21 May 2017 10:10 PM

The US Dollar suffered last week as a result of the political turmoil that overshadowed the US atmosphere from the dismissal of US Federal Bureau of Investigation manager to leak of confidential information from US President Donald Trump to the Russian Prime Minister. Besides a slowdown in some economic data.
This week, the market is looking at many events and economic data that will have an impact on market movements.

We will review them as following :


Eurogroup Meeting


The agenda of the Eurogroup meeting on Monday will have several important topics, foremost of which will be the presentation of the initial agreement signed on May 2 between Greece and the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund on a new set of reforms in the context of Program of economic reforms funded by the European Stability Mechanism.


The agreement is one of the steps towards finalizing the second review of the current program and preparing for the next aid disbursement to Greece through the European Stability Mechanism.


The current economic situation, including the developments in the Eurozone inflation figures, will also be discussed. The main findings of the Seventh Monitoring Mission of Spain, which took place on April 24-26, will also be reviewed.


Inflation Report Hearings
and GDP data in UK


In the UK, a BoE Inflation Report hearings will be held on Tuesday before the Treasury Committee of the Parliament. Recent data showed continued high inflation figures in light of the sharp drop in sterling following the vote for Brexit in June.


Also, the second estimate of GDP for the first quarter of 2017 is due to be released next Thursday, and the economy is expected to grow by 0.3%. The initial reading has recorded a strong slowdown in growth due to weak consumption with the readiness to start negotiations to leave the European Union.


Interest Rate Decision of the Bank of Canada


Bank of Canada is expected to keep interest rates unchanged at mid-2015 level at 0.50%. The Canadian economy continues to suffer from oil price fluctuations and, more recently, disappointing data from the labor market. Eyes will be heading to Rate Statement and what clues will provide for markets.

FOMC Meeting Minutes and the testimony of the former FBI Director


Wednesday will be a very important day as the Federal Reserve will publish the minutes of the last Fed meeting, which held interest rates at 1%, noting that the US economy is on track to raise rates twice this year. Along with recent political tensions may dampen market expectations for higher interest rates in the coming period.


The attention will be drawn to the testimony of former FBI director James Comay who noted that Trump had tried to interfere with the investigation with Michael Flynn, the former White House national security adviser on Russia's relationship to the Trump campaign. These tensions have had a profound effect on the movements of the US dollar and pushed it lower  against its rivals. If comay confirms in his testimony that Trump tried to impede justice, we may see the dollar continue to decline and denying these charges could provide some support for the US dollar. These turmoil is expected to raise doubts about Trump's ability to carry out its electoral promises from tax cuts, stimulus and other fiscal stimulus policies.


On Friday, the GDP data for the first quarter of the year will be released after the preliminary reading showed US economic growth at 0.7%. The economy usually records some slowdown in the first quarter, especially in light of climatic conditions and New Year holidays.


New Zealand Annual Budget Release


The New Zealand government is due to announce its annual budget next Wednesday. As the Finance Minister said, the 2017 budget will depend on the strong performance of the New Zealand economy over the past several years and will focus on creating conditions for further growth and prosperity for all New Zealanders. He also noted that debt reduction as a percentage of GDP would be pursued relentlessly.


OPEC Meeting


OPEC oil ministers and a number of non-OPEC producers will meet on Thursday in Vienna to discuss the extension of the production cut-off agreement, which expires on June 30, until the first quarter of next year. OPEC reached this agreement in November last year With 11 other non-OPEC countries, including Russia.


Oil producers may be heading for further production cuts, perhaps more than the 1.8 million barrels agreed at the last meeting.

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