A Trifecta of Events to Influence Market Direction This Week

Today precious metals prices have remained firm in a narrowly defined range, trading modestly higher. Market participants await the unfolding of three distinct events that will undoubtedly influence future pricing. Until then, traders and investors will be in a holding pattern, characterized by a wait and see attitude as events develop. It is likely that we will see narrowly defined ranges up until Thursday, when key events will begin to take place.

Starting in Europe on Thursday, the European Central Bank has a scheduled monetary policy meeting, which will conclude with a press conference from ECB President Mario Draghi. Concurrently the United Kingdom will hold a general election, with results unfolding by Friday of this week.

This will be followed by the testimony of James Comey to the Senate Intelligence Committee. The former head of the FBI will speak on his knowledge of the current Russian investigation linked to the US election, as well as his recent firing.

Since any one of these events could move the needle in regards to global equities and safe haven assets, the combination of all three could magnify the overall effect of these events.

According to FXStreet, “As far as the ECB is concerned, the focus will be on President Mario Draghi and in particular on any potential hints about tapering of QE earlier than planned. Thanks to improvement in economic data in the Eurozone, calls for tighter monetary conditions especially from several German officials have increased.”

As far as the election being held in the United Kingdom, the outcome could have a tremendous influence on the British pound. If the current Prime Minister, Theresa May, manages to hold her current lead it should give rise to a positive influence on the British pound.

However, the biggest wildcard is most certainly the testimony of James Comey, the former director of the FBI. Depending on the tone and content of his testimony, his words could have the greatest influence on global equities, as well as safe haven assets. If James Comey presents evidence that President Trump did, in fact, attempt to pressure him in regards to the investigation, we could see a major political crisis begin to develop in the United States.

 At a minimum, such accusations would certainly dampen the ability of the current administration to move forward on its current agenda. If James Comey’s allegations are backed with evidence, market participants could witness political turmoil the likes of which have not been seen since the Nixon era. Although it is highly unlikely that the latter outcome would occur, the reality is, as remote as it is, it is a possibility, and as such traders and investors need to be extremely cautious of the week ahead.

Wishing you as always, good trading,