• President Donald Trump was quoted as saying he is ready to act alone on North Korea if China does not change the current situation on the Korean peninsula. The comments were made just days before Chinese President Xi Jinping’s visit.
  • North Korea was back in the headlines soon after it another missile test mid-week.
  • The US military launched a missile strike on a Syrian government airbase on 7 April. The target was the suspected launch site of a chemical attack earlier in the week.
  • Sweden confirmed terrorist attacks on Friday.

Most Federal Reserve officials agree that they will begin shrinking their super-sized balance sheet later this year. What they do not want to discuss in detail yet is how that will shape their plans to continue raising the short-term interest rate in 2018.

Over the weekend, President Mario Draghi sought to quash the idea that the ECB will begin tightening policy sooner than planned, pointing out that CPI in the Euro-zone is not strong enough to start signalling such a shift. Despite Draghi’s rather dovish speech, the Euro did not react to the downside.


The S&P 500 closed the first quarter with a 5.5% gain. That represented the best three-month performance since 4Q15, with markets heartened by US inflation data released on 31 March. In China, mainland stocks rose amid a rally in defence-related equities. Optimism over the Chinese government’s plan to build a special economic zone near Beijing (Xiongan New Area)  likely supported equities.


10-year interest rates fell to as low as 2.32% last week, receding from the 2.60% level reached in March after the Fed announced its second rate hike in the span of three months. As for rate hike expectations, the fed funds futures market does not expect a rate hike to be announced in May (4.3%), but expectations for a June hike have firmed a little, with the corresponding probability rising to 70.6% from last week’s 62.5%.


The pound fell further on Friday morning after worse than expected data on industrial production and house prices suggested the UK economy may be reaching a turning point after its unexpected strength at the end of 2016.

The announcement of macro prudential policy measures to deal with financial stability risks, and a moderation in the Reserve Bank of Australia’s (RBA) tone on the labour market put the AUD under renewed pressure. The break of 0.7590 warns of downside risk for AUDUSD. The currency was down 1.69% for the week.


Oil has been rallying for a couple weeks now. It settled higher this week even though the number of active U.S. drilling rigs rose for an twelfth straight week. Tensions in Syria might be lending support to oil prices, as investors fret over potential supply disruptions in the region, as Syria neighbours with big oil producers in the oil-rich region.

Gold prices traded higher on Friday, buoyed by the release of a mixed US jobs report while geopolitical worries increased demand for safe haven gold. Miners also did well, with GDX up +3.02% and GDXJ up +1.61%.

Week ahead:

Apr 10

  • Norway – CPI y/y

Apr 11

  • US – Job Openings
  • Eurozone – Industrial production
  • UK – CPI

Apr 12

  • UK – Avg. weekly earnings
  • UK – ILO unemployment rate
  • Canada – Policy rate decision
  • Brazil – Policy rate decision
  • China – CPI

Apr 13

  • US – University of Michigan Sentiment
  • Germany – CPI
  • France – CPI
  • Australia – Unemployment rate
  • Canada – Manufacturing sales
  • China – Exports
  • China – Imports
  • South Korea – Policy rate decision

Apr 14

  • US – CPI
  • US – Retail sales
  • US – Business inventories
  • Japan – Industrial production