Weekly Wrap Up (17 – 21 July )

This week witnessed several important economic data and events that had a significant impact on market movements. The following are the highlights of these movements and their reasons:

Asian stocks hit a two-year high this week, boosted by the unexpected growth of the Chinese economy in the second quarter of 2017, with GDP growing by 6.9% driven by strong industrial production and exports.

The British pound fell appreciably during the week to a weekly low of 1.2931 against the US dollar as the official negotiations of Brexit began in Brussels has begun on Monday. The slowdown in inflation in June also played a role in the pound's decline, As the CPI recorded its first slowdown since October 2016, rising only by 2.6% unexpectedly.

The RBA, expressed optimism about the Australian economy's growth in the second quarter as consumer growth recovering, as it remained rates unchanged at a low record of 1.50%.   On the other hand, the Australian labor market continued to improve in the first half of 2017 as full-time jobs continued to grow. Despite this positive trend, the Australian dollar fell from a 2-year high against the US dollar at 0.7988, Due to the downgraded revise reading of employment and unemployment data. After recovering, it returned to the downside again following comments by the RBA deputy governor that the AUD rally is unwelcome, currently trading within 0.7900/20 levels.

Over the course of the week, the US dollar was hit hard by the obstacles facing the US President to implement his economic agenda, especially after the failure to pass the health care law, which opens the door to Trump's ability to carry out the promises during his campaign, as a result the dollar index hit its lowest level for more than a year at 93.75 before the end of trading week.

 The BOJ kept its policy unchanged as expected as inflation expectations were lowered and growth expectations were raised. Kuroda's comments, the governor of the Bank of Japan, suggested that the bank would not change its policy any time soon.

In contrast to Europe, markets continued to be optimistic that the ECB would shift its policy and reduce the monetary easing program despite keeping monetary policy unchanged at its last meeting yesterday, indicating that it will remain until the end of this year, pushing the euro to its highest level in more than two years against USD at 1.1676 levels.