In my previous piece last week, I saw the best possible trades for the coming week as long of the EUR/USD currency pair, and long of the Nasdaq U.S. stock market index. The EUR/USD currency pair fell by 0.13% while the NASDAQ fell by 1.30%, producing an average loss of 0.59%.

Last week was relatively quiet, with few major developments affecting markets. There is a newly enhanced sense of fragility around the Trump Administration as the President loses more key staff and as the Mueller inquiry and rumblings within the FBI continue. It is seen as increasingly possible that a criminal indictment could be brought against President Trump. As for fundamental economic data releases, last week was dominated by weak U.S. retail sales data, and inflation exactly as expected by the consensus forecast.

The overall effect of these developments was to leave the U.S. Dollar largely unchanged, while the stock market fell a little. The market will now look ahead to the FOMC projections and Federal Funds Rate due from the Federal Reserve later this week, as well as monthly guidance and a rate decision from the Bank of England. This could put the GBP/USD currency pair in strong focus during the second half of the coming week.

There were no major central bank guidance events occurring last week. The Japanese Yen and the British Pound were the week’s major gainers, while the Canadian Dollar is currently the weakest major currency.

Fundamental Analysis & Market Sentiment

Sentiment and fundamentals are easier to read, especially when it comes to the U.S. Dollar which has some strength from strong economic fundamentals, although neither fundamentals nor sentiment give it enough strength to rise as there is no expectation of an increase in the pace of forthcoming rate hikes, which have already been priced in

Another key development which is affecting sentiment is the continuing struggle between the Trump administration and the deep state, as the special investigation into Russian collusion continues towards a path where it seems the object may be to simply land any kind of criminal charge against the President. This is negative for the U.S. Dollar and for the U.S. stock market.

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