UK Vote Shakes Roils

9 June, 2017

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.

Yellen's Testimony, BoC Interest Rate Hike, Big Bank Reports

Hawkish or Dovish, well today we have retrospective examples of its effect on the sentiment for a currency. In one case Yellen’s indication that national debt should be capped and that monetary policy should be gradual...

Gold Dropped as Forecasted

This is a notable day for several interrelated moves: the fall of the yen, the rise of the dollar, and the drop in precious metals. All these changes resulted ...

Deutsche Bank Derivative Loss

Although markets seemed to calm after last week’s activity, this doesn’t mean that the newsrooms are quiet. One of the big topics – is Deutsche Bank’s big derivative loss estimated at $60 million due to a risky bet placed on U.S. Inflation. According to

Italy Commits 17 Billion Euros to Keep Veneto Banks Afloat

Italy arranged for one of the biggest bank rescues in history, with a cost of up to 17 billion euros ($19 billion) in order to wind up two failed banks in one of Italy's wealthiest regions. However, the deal- which was approved by the European Commission...

Oil in Bear Market

Yesterday we saw a continuation in the drop of oil prices, which rippled out into the markets – pulling down both US and European Stock with it. This is likely a result of fears due to the non-OPEC countries ramping up production to cover the gap left from the OPEC+ agreement to restrict production...

Brexit Update - The EU Wins Round 1

Although not an outright conflict, the discussions surrounding the Brexit talks have been at best contentious and at worse...

Economic Calendar: BoJ, ECB, US Housing

The previous week's economic calendar had the potential to destabilize some of the world's most traded currencies...

Is the USD Going Up After its Recent Drip?

The US dollar is showing signs of recovery against other major currencies, sans the GBP. After the Bank of England Meeting Minutes announced an increase of interest rates, GBP/USD prices saw a significant upswing. This resulted in GBP climbing from 1.2696 to roughly 1.2755...

US dollar saw a rapid drop

The US dollar saw a rapid drop of its price opposite other major currencies after the announcement of the less than positive and expected statistics regarding U.S. inflation and retail sales. Retail sales dipped significantly to 0.3% in May down from the 0.4% rate of the previous month...