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June 2016

Sterling suffered from Brexit-itis

Published: Thursday 02 June 2016

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  • Sterling suffered from Brexit-itis
  • ECB and BOE in spotlight today
  • Aussie data weakens AUD

The first day of June saw Sterling slide as traders and investors continued to wring their hands over the potential UK exit from the EU. The Pound lost a cent and a half against the Euro and a little less against the US Dollar. Sterling traders are now poised to await the comment from BOE Governor Carney when he speaks at 2pm BST. He will be unveiling the new plastic £5 note; let's hope they don't melt before our very eyes. Will he make any comment about the EU referendum? No one knows but we will all listen just in case. This evening we'll see a televised Q&A from David Cameron on the UK vote. He is a 'Remain' campaigner as you know and tomorrow brings a similar Q&A with 'Leave' campaigner Michael Gove. I wonder if either of them will say anything new or anything we can believe.
 
Another key event for today will be the announcement of the interest rate decision from the European Central Bank. No change is expected at the announcement but the press conference that follows will be closely monitored for references to the UK's referendum and further quantitative easing from the ECB. Central banks haven't yet woken up to the fact that all this cheap money in the system is probably just saving up a problem for later on but we may yet see further QE from the ECB as they grapple with an unresponsive Eurozone economy.
 
We saw and increase in Japanese consumer confidence overnight. That levelled the Japanese Yen off and calmed a few nerves. Overnight news from Australia was mixed. A fall in retail sales activity was not good news for the Aussie Dollar but the trade deficit narrowed and that muted the market response to some degree. Nonetheless, the Australian Dollar did weaken on outside of UK trading hours.
 
The rest of today's news includes US weekly jobless claims data but the big event for the USD is tomorrow's employment report.
 
Aside from the markets, David Cameron famously left a child in the pub and I am sure many parents have had a small child hold their hand before realising that they have grabbed the wrong mummy or daddy but Joseph Fuller from South Carolina is finding it hard to live down his case of mistaken identity. Grandfather Joseph called at his grandson's school to pick him up, hugged the child, signed him out, got him in the car where grandma handed his food without turning around and it was only when they got him back home that they realised that had the wrong child. So that's an ooops for the teacher, an ooops for grandma and grandpa and an oops for a child who thought Joseph was his real granddad.


Sporting manners

 
"Now Jack," the PE teacher says, "you know the principles of good sportsmanship. You know the inter-school championship doesn't allow temper tantrums, shouting at the referees or abusive language don't you."
 
"Yes, sir, I understand that."
 
"Good Jack. That's excellent. Now would you please run over there and explain it to your mother."
 

Today's Major Economic Releases 

 
Market BST Data/Event Previous Expected
GBP 09:30 UK: Construction PMI 52.0 51.2
EUR 10:00 EU: PPI m/m 0.3 0.1
USD 13:15 US: ADP non-farm employment rate 156 174
EUR 13:30 EU: ECB press conference    
USD 13:30 USD: Unemployment claims 268 270

Daily Currency Insight by David Johnson

Daily Currency Analysis with Chris Verdet

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