Traders are eagerly watching the outcome of the French election, with the far-right National Rally (RN) leading the first round but facing opposition from left-wing and centrist parties in the second round. The rise of Eurosceptic parties is seen as a negative development for the euro, so efforts to block Le Pen’s march are viewed positively. However, uncertainty remains as investors wait to see if a stable government will emerge or if a hung parliament will lead to political paralysis.
In the US, Fed Chair Powell’s testimony before the Senate Banking Committee will provide insights into the economic outlook and monetary policy actions. Powell’s recent comments at the ECB forum suggest that the Fed may consider rate cuts this year, potentially impacting the US dollar. The US CPI data on Thursday will be closely watched, with a slowdown in inflation possibly leading to increased bets on Fed rate cuts and further weakening the dollar.
Meanwhile, the RBNZ is expected to leave interest rates unchanged at its upcoming meeting. Despite speculation of rate cuts by the end of the year, positive economic data may support the Bank’s hawkish stance and prompt investors to scale back rate cut bets, boosting the kiwi. Kiwi traders will also be monitoring Chinese CPI and PPI data for further insights.
In the UK, with the general election over, pound traders will shift focus to economic releases such as the monthly GDP for May and industrial and manufacturing production numbers. The Labor Party’s majority in Parliament may influence the Bank of England’s easing process, potentially impacting the pound. Improved GDP in May is unlikely to alter market expectations regarding the BoE’s plans significantly.
Overall, traders will be closely monitoring these events and data releases for potential market impacts and trading opportunities. The outcomes of the French election, Powell’s testimony, US CPI data, RBNZ meeting, and UK economic releases could all contribute to market volatility and trading opportunities in the coming days.