Pound Rises The Most In A Day Since 2008
Lots of economic data and events scheduled for today and some with high volatility risks associated. Upcoming news include Consumer Prices from Germany, and unemployment from the UK. In the US, Beige Book as well as House prices are up for release while Janet Yellen speaks as well. For now, the markets are digesting the comments from Theresa May yesterday as well as Donald Trump overnight. Both of them, especially May’s comments created volatility in the market yesterday.
Currencies: The Dollar weakened across the board after Donald Trump called the Dollar too strong in part because China manipulates its own currency. Sterling especially rose against the USD the most since 2008 (in a single day). The GBPUSD rose from 1.2010 to 1.2415 after Theresa May’s speech on Brexit. The fact that the UK PM announced that Brexit will be voted by both houses of parliament gave some hopes that an interim deal between UK and EU will be brokered so as to limit the effects of a hard Brexit.
Stocks: Equity markets were weaker with the Dow Jones and S&P 500 both down 0.2%. The FTSE 100 closed down 1.5% due to GBP strength, but other European stock indices were only down 0.1-0.5%. Asian stocks saw modest gains with Nikkei adding 0.3%. the next event to influence stock markets will be Donald Trump’s Inauguration on Friday.
Oil and Gold: Both oil and Gold rose yesterday helped by a weaker Dollar. WTI oil rose 0.17 cents to $52.65 per barrel as the Dollar hit 6 week lows. Gold surged to $1218 its highest since November 22 as the threat of Brexit, a weak USD, and the risks of a Trump Presidency create demand for the safe haven status of Gold.
Disclosure: None.