The Uncertainty in Europe Looms

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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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