Yesterday wasn’t a good day for Britain. The UK faces a hung parliament with an uncertain course on the Brexit negotiations and how Britain will handle their exit from the European Union. This has led the pound to drop while other assets tranquil in the wake of the UK election results.
GBP dropped the most since January as the leading Conservative Party, which was expecting to win most seats, has in fact fallen short of winning the overall majority with only 317 seats. However, this did not have a major impact on other assets, with volatility measures retreating.
Equities from South Korea and Singapore have greatly advanced along with S&P 500 Index futures whereas Treasuries were very slightly affected and Gold dropped again for a third consecutive day.
The day after the election comes after several major events that captivated investors all week, but as traders shook off the UK elections they weren’t affected either by the ECB’s decision from ex FBI Director James Comey.
Mario Draghi, the European Central Bank’s president stated that Europe still isn’t creating enough inflation, which makes it more difficult for officials to upgrade their growth assessments.
Donald Trump and Comey, blamed each other for being dishonest regarding their private encounters after the Senate testimony which focused on whether Trump sought to suppress part of a federal probe into Russian meddling during the elections in 2016.
Later on today, the Canadian employment data is predicted to have mixed figures with an increase in employment but with a higher unemployment rate as well, probably because of the higher participation rate. However, as it usually happens with Canadian data results, the changes in oil prices may prove to be more significant. After Wednesday’s major drop in oil, it might be hard for CAD to have a substantial shift towards higher prices.
There is a prediction that on Friday afternoon there will be some profit-taking on those who were short CAD. Speculators have been at record short CAD levels for the past couple of weeks with some closing out their positions at a profit- the best hope for the currency.