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THE BATTLE OF WILLS

In what can only be described as an 'action packed' week, we've seen currencies see-saw wildly all over the place as the mighty dollar made a desperate comeback after being savaged on Friday and Monday. As a result of President Trump's failure to push through an alternative healthcare bill, the dollar resembled a live wire that nobody wanted to touch. After forcing EUR/USD above 1.09, cable over 1.26 and USD/JPY to 110.00 the greenback started it's fightback against the majors in Tuesday's session forcing back most of it's losses from the previous two days.

OUR THOUGHTS ARE WITH YOU

The week comes to a close with the world yet again shocked at the disgraceful events witnessed, this time in London. People have lost a mother, a father, a son, a daughter, a sister, a brother, a husband, a wife. These people have lost their lives unnecessarily and our thoughts are with the relatives at this unimaginably difficult time for them.........

AND NOW THE THREATS START....

So Theresa May kicked off the week by announcing Brexit would begin it's planned two year 'divorce' negotiations starting 29th March. The announcement went down in Utopia (aka the EU Commission) like the fireside scene from Blazing Saddles. Sounds of derision howled around the ivory towers as EU Commission President Jean Claude Juncker quickly tried to ward off increasing dissent from other European nations stating "They will all see from Britain's example that leaving the EU is a bad idea".

FIRST BREXIT, NOW SCEXIT?

Well, what a week this could turn out to be! Events galore are going on around the globe that will surely rock and roll the markets in the next few days.

Non-farm Payrolls (NFP) key to interest rate hikes?

We started the week with the usual political uncertainty surrounding the euro. According to polls French Presidential candidate might not have it all her own way now that a new candidate has emerged in the form of Alain Juppe to possibly take the place of the scandalous Francois Fillon. This has given the euro a tiny bit of support in a time where it desperately needs it. Any strength in the European currency in the short term will be heavily dependent on whether Trump's dollar led rally fizzles out (of which there are just a few signs that this may be happening).

YELLEN: WILL SHE, WON'T SHE?

So the odds of a March interest rate hike have soared from 30% to over 70% in just one week! This followed heavy jawboning and hawkish rhetoric from several members of the Fed. As expected this has led to dollar strength and weakness in other currencies. Cable is trading below 1.23 and EUR/USD at 1.05. However Fed Chair Janet Yellen has been put under enormous pressure as a result of the U.S economy and dollar being talked up.

IS THE FED CONFUSED NOW?

So, we sat there with baited breath awaiting the minutes from the Fed to give everyone some clue of timings on interest rate rises in the near future. After hawkish comments from Fed officials during the week the expectation of the big rocket about to be sent up into the sky was anticipated...... instead we got a pathetic fizz then pop and the show was over. The Fed's minutes were slightly dovish to such an extent that odds of a rate rise before June languish at 40%. The U.S dollar suddenly took on the face of the ugly sister and declined.

THE EUROPEAN COMMISSION - the gift that just keeps on giving!

As 'The Donald' was giving us all a right good belly laugh at his latest, rather strange press conference, Nigel Farage took his opportunity to truly lay into European Parliament members in what can only be described as a brutal match. Not since Lennox Lewis used Mike Tyson's face to break his hands have we witnessed a beating administered with such calculated savagery. Farage seems to be growing in stature every time we see him in public after his Mystic Meg predictions about Europe made years ago are becoming more real by the week.

EURO WOES

As we have previously stated on numerous occasions, the markets are currently under the influence from geopolitical concerns. Investors are very cautious about the rapid rise of populism across the globe especially in the 'united' states of Europe. Upcoming elections are being carefully eyed by the elites with many of them biting their fingernails at the potential outcome.

IT'S PUNCH AND JUDY TIME!

So, as Trump is inaugurated, the lack of clarity on fiscal policy combined with a "protectionist" theme has driven markets into more uncertainty. Fears of trade wars (that benefit nobody) immediately surfaced. Trump also announced the building of a wall on the Mexican border. He seems so hell-bent on putting this wall up that he could possibly pick up the builder's trowel himself and start laying bricks!

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