Weekly Wrap Up ( 5 – 9 June )

Unlike last week, the beginning of this week was full of important events that had an impact on market movements. It was the beginning in the Middle East when Saudi Arabia, Egypt, the UAE and Bahrain cut off diplomatic relations with Qatar accusing them of supporting terrorist organizations. 12 countries were with this decision. Sheikh Sabah al-Ahmad, the Emir of Kuwait tried to calm the situation, but his attempts failed, amid calls from the American side to end the siege on Qatar.

The impact of these events was clear on the markets, as the main index of the Qatari stock market fell by more than 7% during the week to suffer losses estimated at 35 billion riyals, and then came on the oil prices, which continued to decline to reach the lowest levels in almost a month at levels of 45.19$ a barrel. While Brent crude was trading at the end of the week at 48.10$ a barrel.

The Australian dollar ignored data indicating that the Australian economy slowed in the first quarter of this year and continued to rise since the beginning of the week to reach its highest level against the US dollar since April 25 at 0.7566. Prior to the release of the data, the RBA's vision was to maintain its easing policy unchanged as interest rates were left at the lowest level, with the possibility that they would remain for a period of time under current policy.

The Euro, after starting a stable trading session this week, fell markedly a day before the ECB meeting following some news about the Bank's lowering inflation expectations. The central bank then confirms this and cuts inflation expectations until 2019 as well as maintaining its current policy leaving the door open for further stimulus if necessary. As the week draws to a close, the EURUSD is trading near 1.12 levels a week low.

Also, the markets went to follow the testimony of James Comey, the former FBI director before the Senate, in which he accused the administration of President Trump of distorting his image by claiming lies about him, which came in the light of the request of Donald Trump from Comey to suspend investigations with the former National Security Adviser In the White House on the intervention of Russia influence in the recent presidential elections. The dollar index rose at the end of the week to trade at 97.22 at the time of writing, near its highest level since the beginning of June.

After demands for resignation after her party failed to win a majority in parliament, Prime Minister Teresa May said she would not resign and even ask the queen to form a new government and added that her party would align with the Democratic Unionist Party (DUP). The Conservatives won only 318 seats and stayed away from the 326-seat majority, and the alliance with the 10-member the Democratic Unionist Party would secure the majority to form the government.
Following the loss of Teresa May to the majority, sterling has fallen against most of its rivals, with the GBPUSD dropping nearly 300 pips to test a strong support at 1.27.