Bullet Report | From Brexit to FOMC: Change of Focus, at least today

Today’s attention shifts from Brexit to the FOMC. Although there is practically no chance for a rate hike today, market participants will focus on the press conference in order to gauge FED Chairwoman Yellen’s hints as to the timing of future rate hikes. Overnight, risk appetite improved and most Stock indices recovered slightly.

Currencies: Yesterday was another USD day. GBPUSD dropped below 1.41 for the first time since mid-April, while EURUSD returned to 1.12 – a level last seen since before last Fridays brutal NFP report. Improved stock market sentiment has helped also USDJPY recover from 105.65 to 106.25 at time of writing. AUD/USD and NZD/USD rose 40pips and 50pips from the lows respectively above 0.7370 and 0.7020.

Stocks:US stocks fell for a 4th straight session yesterday, making the SP 500 and the DJ longest losing streak since the February lows. The lows reached yesterday were also combined with another spike in Volatility which is now the highest since February. This reveals the nervousness of the markets, which can be attributed to Brexit fears, and new terrorist attacks in France (although on a smaller scale than last November). Despite the US selloff, Asian markets were mixed and European markets seem to be in recovery mode so far.

Oil and Gold: US Crude fell to a 3 week low of $47.55 as the price of oil suffered losses for the 5th straight day. Brent was also down for the 5th day to hit its lowest in 2 weeks. Data yesterday showed that crude oil inventories rose by 1.2 million barrels in June, but that aside, Brexit fears and its implications on the global economy is giving oil traders more concern at the moment. The influential Sun newspaper, also came out in support of Britain leaving the EU. If Britain voted to exit the EU, investors fear the bloc could slip into a recession that would undermine oil demand.

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