The Friday Forex Takeaway – Episode 37

<h2>Key Points from This Week</h2>
<p><strong>US Civil Unrest Intensifies</strong></p>
<p>Black Lives Matter protests, which sprung up in the wake of the killing of unarmed, black-American George Floyd last week, have raged for 10 nights now. Sprawling across more than 141 cities the protests have been met with a highly aggressive response from the police force including the use of teargas right outside the White House. With protestors continuing to defy curfews Trump has threatened to deploy the army nationwide if the disorder continues. 4 officers have now been arrested over the unlawful killing of Floyd.</p>
<p><strong>US/ China Tensions Reduce</strong></p>
<p>With the US administration freshly occupied with the sprawling civil unrest underway, tensions with China have fallen back. Despite previous threats, China confirmed this week that it will allow limited flights from the US to recommence, avoiding potential restrictions from Trump who threatened to ban flights from China if China followed through with previous warnings. For now, trade negotiations remain intact though there are still plenty of risks in the near term especially given China’s public criticism of how Trump has handled the protests.</p>
<p><strong>ECB Increases Stimulus by Almost Double</strong></p>
<p>Amidst downward revisions to growth and inflation forecasts as a result of the ongoing pandemic, the ECB announced that it will be increasing the size of its current stimulus package by 600 billion EUR to 1.35 trillion EUR. Lagarde warned markets that plenty of downside risks and uncertainty still remain but sought to reassure investors that the central bank stands ready and willing to do whatever necessary to support the economy.</p>
<h2><strong>Key Events Next Week</strong></h2>
<p><strong>FOMC (Wednesday)<br />
</strong></p>
<p>Over a quiet data schedule next week, the main event to note is the June FOMC meeting. The broad expectation is that the bank will remain on hold, keeping policy steady following the recent wave of unprecedented monetary policy adjustments over recent months. With unlimited QE in play and rates at record lows, the Fed will likely highlight the continued uncertainty and downside risks in its outlook while reiterating its commitment to supporting the market. The key will be whether the Fed chooses to give any signal regarding potential forthcoming policy changes across the rest of the year as many now forecast the Fed to employ yield curve control methods, not seen in the US since WWII.</p>
<h2>Keep An Eye On</h2>
<p><strong>OPEC</strong></p>
<p>There has been a great deal of speculation and confusion over recent days amidst reports that OPEC+ was due to announce a meeting aimed at agreeing an extension to the current production cuts in operation. It now looks as though this meeting could take place next week though there are still some reports that it could come as early as the weekend. If OPEC+ can agree an extension this should help further support the recovery in WTI. However, if a deal does not take place or if an extension is not agreed, this could see a fresh wave of selling in oil markets.</p>
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