Brexit continues to be the main focus in the markets, especially after rating agencies cut down the growth outlook for the UK to “negative” citing “less predictable, stable and effective policy framework in the UK”. After two days of selloffs, stock markets and the GBP managed to recover today despite US markets closing deep in the red zone and GBP hitting a new multi decade low.
Currencies: GBPUSD hit a new 3 decade low yesterday amid the selloff that continued. GBPUSD or Cable as it is widely referred, dropped to 1.3115 however a reversal in stock market sentiment in Asia helped boost the pair up to 1.3335 overnight. Moreover, markets take this as a profit-taking opportunity as dust settles over the Brexit aftermath, while focus now shifts towards the US fundamentals, with the US final GDP in focus for today. EURUSD is little changed at 1.1050 after falling to a 3 month low at 1.0912 on Friday. USDJPY is also trading in a narrow range between 101.55 and 102.15.
Stocks: Asian stock markets rose for the first time in 3 days and European stocks are also opening the day in a positive tone after a 3 day selloff. Last night, US markets continued their slide with DJ losing 1.5% while SP500 dropped 1.81% to close at 2004.54.
Oil and Gold: Oil prices were stable to positive in Asia with US Crude oil inventories later in the day and stock market recovery being the reason for it. Overnight, Crude oil prices fell to a 6 week low as a stronger USD weighed on the global oil prices. Crude oil prices are still up 65% from their mid-February lows when they fell to a 13 year low of $26.05 a barrel. Gold, which moves inversely with stock markets dropped from yesterday’s highs and is trading at $1318. As always global sentiment will set the tone for the yellow metal which moves inversely correlated to stock markets as of late.
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