Sun: NZD – Trade Balance
Mon: USD – Services and Composite PMIs
Tue: USD – PCE, GDP, Consumer Confidence
Wed: GBP – Mortgae Approvals, Net Consumer Credit, EUR – German CPI, USD – PCE Core, Crude Oil Inventories
Thu: EUR – German Unemployment, EZ CPI, ECB Meeting Minutes, GBP – GDP, CAD – GDP
Fri: JPY – CPI, CNY – Manufacturing PMI, EUR – EZ Manufacturing PMI, EZ Unemployment Rate, USD – ISM Manufacturing
Overview
USD Two days of testimony be Fed Chair Janet Yellen did little to offer hope for the prospects of a US rate rise in the coming months. During her testimony to the Senate Banking Committee, the Fed chair said that Brexit will pose significant risk to the US economy and global financial market stability. Amid uncertainties on global development, Yellen added that “cautious approach remains appropriate”. With Britain having voted to leave the EU, US rate hike expectations are now being unwound in line with these comments.
EUR The euro was under significant pressure from the UK’s decision to leave the EU, which saw the single currency collapse lower against the US dollar yet surge higher against sterling. Markets now await a response from the ECB, who cautioned before the voting that they stood ready to cushion markets with liquidity in the event of Brexit.
GBP Sterling suffered its largest intraday loss on record, as massive declines ripped through the early hours of Friday morning as banks and hedge funds acted on the the private exit poll data they collected. With the UK having voted to leave the EU, it remains to be seen what the medium- and longer-term consequences will be, with most forecasting severe damage to the UK economy on capital outflow.
JPY The Japanese yen was dramatically higher this week, reversing its initial weakness, on news of the UK’s decision to depart the EU. As Asian markets went into tailspin on Friday, safe-haven buying kicked in, taking the Japanese yen back through highs. Traders now await response from the Bank of Japan, who will surely have to deal with this latest round of JPY strength.
AUD AUD tracked the moves in risk markets in response to the UK’s leaving of the EU, which saw AUD sliding against all but the British pound. Minutes of the Reserve Bank of Australia’s (RBA) 7 June meeting revealed the central bank considered the current policy setting as appropriate for promoting sustainable economic growth and returning inflation to target over time.
CAD The Canadian dollar weakened in response to the UK’s decision to leave the EU, mapping the moves seen in oil prices, which tumbled on the news. Traders are increasing their expectations of further Bank of Canada easing in coming meetings .