The long-awaited meeting between American President Donald Trump and his Russian counterpart Vladimir Putin took place in Helsinki, where the American leader re-iterated his belief that Russia should ideally be a friend or a “competitor” rather than an enemy.
The dollar managed to remain within the 94.4080-94.7740 range against a weighted basket of other major currencies during Monday’s trading period, suggesting that the meeting – or, indeed, the defrosting of tensions which it seemed to represent – did not have the potential to deeply spook the forex markets.
In other global political news, Brexit was high on the agenda in the UK.
Embattled Prime Minister Theresa May accepted a number of proposed amendments from rebels in her Conservative Party who are looking to secure a cleaner break from the European Union. These included changes to the proposed Customs Bill, which could have a strong impact on how easily the UK can trade with Europe when the country leaves the bloc next March.
These sorts of developments can have a twin effect on the Great British pound. Not only were the amendments likely to push the UK towards a harder Brexit, something which the forex market has proven itself to be largely against, they are also likely to portray May as a weak leader in the eyes of her more pro-EU colleagues. This, in turn, could lead to greater political instability.
The EUR/GBP pair traded well, largely as a consequence of these developments. It moved between a range of 0.8816/53, and it even ended the day almost a quarter of a percentage point higher than where it began.
Looking ahead to the rest of the week, significant developments for the US dollar are on the horizon.
The main news to look out for will be the speech given by US Federal Reserve Chair Jerome Powell to a key Senate committee. It is likely that this speech will focus in part on the wider economy, while he is also expected to discuss monetary policy.
There’s also a lot to think about outside of Europe and North America this week.
Tuesday sees the reveal of the July meeting minutes of the Reserve Bank of Australia (RBA), which could provide significant information about the state of the Australian economy, particularly as it pertains to the country’s housing market.
There could also be some knock-on effects for the New Zealand dollar too, after a data release yesterday.
Statistics showed that the country’s consumer price index was below market expectations, suggesting that spending in the country is not quite as buoyant as had previously been expected.
Partly as a result of this development, the New Zealand dollar fell against its US counterpart from 0.6793 to 0.6765 on Monday. However, this was also in part due to problems in the commodity markets, which can have a profound effect on the currency performance in Oceania.