The Uncertainty in Europe
Looms
Last week, a
suicidal bomb went loose in Manchester Arena during the concert of pop singer
Ariana Grande and claimed 22 lives. British government has called for a
suspension of all rally campaign that is supposed to prepare for the National
polling on 8 June. The Islamic State of Iraq has claimed responsibility for the
attack. Currently, the U.K. national security is going through tight scrutiny
and high alert for maintaining social peace.
For the coming June, we have had expected
a smooth victory from Conservatives Party led by Theresa May. The ruling
government is in the midst of negotiating more benefits with European Union to
mitigate the setbacks of BREXIT. Sometime in mid-June, the
U.S. FOMC will hold their mid-year interest rate meeting while most people had
anticipated a rate hike. With the current political risk faced by President
Trump on the investigation on his link to Russia operatives, we would expect no
action from policymakers since Trump has left the country for a series of
state-visit to Middle East.
Looking at the situation now, there
could be more uncertainty in European zone as fear spreads across the
continents. Terrorism remains as prime menace to the prosperity and peace of
the regions. While we have yet heard about the postponement date of U.K.
polling, another national election will be in September as Germany rounds up
its polling campaign.
Coming to June, stock markets will
stay sideways as risk is still unpredictable. European countries are badly facing
social problems like involuntary migrations, terrorist acts, economic slowdown,
ballooning sovereign debt, cyber attacks etc. What could be jeopardising is the
fluctuating Dollar that is directly inverse to Euro currency. Since Trump won
the election ion last November, Dollar Index has flight from 97.00 to 103.00
highs but now returning to the exact bottom of where it came up from! In other
words, a rising Euro could be detrimental at the current weak economy among the
19 countries in Eurozone.
While North Korea fired its new
ballistic missile again on 22 May, the UN Security Council has expressed deep
concern of the rebellious act and plans to take counter action. To round up the
whole global story, yellow metal has become a safe haven again for investors to
hedge their risk against uncertainty. Looking at the trend of Gold and Silver,
it would make a good bet if anyone can spot the bottom of the uptrend that is
just starting to move now. Keep an eye on the precious metals in case we see a
further decline in Dollar towards the year-end.
~ DAR Wong in a registered Fund Manager in
Singapore. The expression is solely at his own. He can be contacted at dar@pwforex.com
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