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U.S. shares edged lower at the close on Friday with the Dow Jones Industrial Average dropping 0.15% while the S&P 500 index and the NASDAQ Composite index both sliding 0.04%. Meanwhile, the U.S. dollar tumbled to the lowest level in more than a year against a basket of the other major currencies on Friday.
Pressured by a strong euro, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, shed 0.32% at 93.78. This was the lowest close since June 22, 2016. The index closed the week 1.32% lower to extend its downtrend to a second straight weekly decline.
In the week ahead, the Federal Reserve is scheduled to hold a two-day policy meeting which will come to a conclusion on Wednesday. Markets expect the central bank to keep its interest rates unchanged in a range between 1.0%- 1.25%. The Fed will also release its post-meeting statement which may provide investors with fresh clues about the central bank’s plan of hiking rates as well as unwinding its $4.5 trillion balance sheet in the months ahead.
After the Fed’s rate decision, the U.S. is due to release preliminary figures on second quarter economic growth on Friday which is anticipated to show the world’s largest economy have expanded at an annual rate of 2.6% in the April-June quarter after having grown at the rate of 1.4% in the first quarter.
In addition to the GDP report, there are also several key U.S. economic reports including data on existing and new home sales, consumer confidence, as well as durable goods orders and weekly jobless claims.
For the stock market, among more than a third of the S&P 500 companies and 13 Dow stocks set to post results, FANG names including Facebook, Amazon and Alphabet will draw market attentions. Other major U.S. companies such as Exxon Mobil, Caterpillar, McDonald’s and Boeing will also help sharp the U.S. equity market.
The euro jumped to its highest level in nearly two years against the greenback. The pair EUR/USD added more than 1.6 percent for the week to reach highs of $1.1683 on Friday, the highest level since September 2015. The single currency was boosted higher by expectations that the European Central Bank is moving closer to tapering its bond-buying program after holding borrowing costs at record lows on Thursday.
Next week, the euro zone is to publish preliminary data on manufacturing and service sector activity for July on Monday, amid expectations for a modest decline.
Turning to the British Pound, the Office for National Statistics is to produce preliminary data on U.K. economic growth for the second quarter on Wednesday. The report is expected to show the economy has grown 0.3% in the three months ended June 30. On a yearly basis, the British economy is expected to grow 1.7% in the second quarter. The economy expanded at the rate of 0.2% on a quarterly basis and 2.0% on a year-on-year basis in the preceding quarter.
The Australian dollar turned lower on Friday after surging to the highest level since mid-May in 2015 versus its American counterpart on Thursday. Australia is to publish data on second quarter consumer price inflation on Wednesday which is expected to show inflation increased 0.4% in the April-to-June period, after rising 0.5% in the first three months of the year.