Yes, the past week was dominated by the British referendum. As expected, however, many of the results expected almost the opposite. GBP / USD has experienced the biggest collapse of a 30-year history: the pair touched 1.3225, but closed trading near 1.3654. In parallel with this growing yen, received good support in the form of flight to safe assets. GBP / JPY, for example, lost 6.43%, while the GBP / USD only 4.8%.
It was dominated by the sale of the equity markets, and in the lead, quite predictably, turned EURO STOXX 50, rolled down by 3.75% down. Brent came under pressure and stuck near 48.40, but the precious metals used in high demand. Gold has added 1.30%, while silver – 1.48%.
Chart of the week:
Economic data of the previous day:
- Britons voted for withdrawal from the EU
- Janet Yellen reiterated its uncertain stance on rates
- Minutes of the last meeting of the Reserve Bank of Australia confirmed the low chances of a rate cut in the near future
The forecast for the week June 27 – July 1
Week ahead – is the week of stabilization and the search for new investment decisions. How to live after leaving the EU – it is the question everyone will be trying to answer. And on the surface of the answers: the current dynamics of the stock market says that benefited from all that is happening … it is the British FTSE (Z). It is clear that his role is played by the fall of the national currency, which promises a more competitive environment for the corporate sector in the market of goods and services. However, among other things, the market has started to price the probability of additional stimulus the British economy in connection with an event, and for the FTSE may talk about the medium term, a gradual strengthening. The index can still bend in the area of 5930, but this is the level at which it is worth buying for the purpose of 6140 to the end of the week.
Commodity and raw market
Brent remains under pressure because of obvious factors. The first flight of the risks shows distrust of the global pace of the economy, and hence to the recovery of the global demand for energy. Second, the growing interest in the US dollar in the last trading session, creating unfavorable conditions for the USD denominated in the dynamics of oil.
To understand what to put on, it makes sense to determine the measure of the influence of two similar factors. Investors’ concerns about the pace of global economic growth can be maintained in the coming weeks that will limit the rate of growth of Brent. All attempts to strengthen the oil will give rise to a serious rebuff. This is a negative factor. Flight from risk means demand for safe-haven currencies, among them the US dollar. And yes, in this case, Brent every chance to remain under pressure, that does not mean that the reports on oil reserves from the API and Energy Ministry will not be influenced. Yes, of Brent could make an attempt to consolidate above 50.00, but they will be followed by corrections.
And on the GBP / USD. Yes, we have seen a massive fall in the pair and relatively large-scale correction. What will prepare us a couple at the next week? Most likely, a new wave of sales. Primary drop reaction was understandable. Secondary correction up too – profit taking at the end of the trading week. What will be the subsequent reaction? After short-term thinking and weighing the “pros” and “cons“, it becomes apparent that the UK will build the world anew. But that takes money and incentives. And then, the Bank of England policy will be particularly soft. And, then, GBP / USD is worth selling. It is possible that the pair may once again go to the area of 1.33 during the week.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.