The euro weakened against the dollar last week. The dollar’s strength as a major safe haven in the escalating trade war and forecasts that current European ruling parties will lose numerous parliamentary seats to the mounting numbers of populists in the region weighed on the euro.
The British pound is in free fall. Cross party talks between UK Premier Theresa May and the Labour party ended unsuccessfully. The rising popularity of the hard core Brexit party ahead of the European parliamentary elections are further complicating the three-year long Brexit impasse.
After a recent uptrend, the Japanese yen weakened against the dollar and the trend reversed. This came on the heels of Bank of Japan Governor Kuroda’s statement that Japan is not considering additional easing measures.
Relations between the US and China deteriorated. The US imposed new sanctions on the Chinese tech giants Huawei and ZTE moving the ongoing trade war into another phase as it starts to resemble a technology war.
Gold prices retreated as the appeal of rising yields on US bonds undermined the shine of the yellow metal.
U.S. stock indexes recovered slightly after a sharp fall from a week before but remain volatile. Investors remain cautious as they await signs of new trade negotiations between the US and China. Traders also fear that Apple may be targeted by China in retaliation for sanctions against Huawei and Apple’s stock price has fallen as a result.
Oil prices rose last week on the readiness of OPEC and its allies to extend production cuts beyond June but a final decision will be made at the next full OPEC meeting next month. Tensions in the Middle East provided additional support. On the other hand, deteriorating U.S.-China relations capped price gains. U.S. oil rigs count fell by 3 units last week, to 802 in total.