Stocks at all time highs, GBPUSD rises 300 pips. No more Brexit Crisis?

The positive risk sentiment in global financial markets continued yesterday. SP 500 extended record run to close at 2152 up 0.7% on a combination of positive US data, hopes on the face of the new UK Prime Minister, and Japanese stimulus measures to weaken the JPY. As a result all risk assets including OIL & Stocks are enjoying a nice run, while other assets such as GOLD suffered big losses. In UK, outgoing Prime Minister David Cameron will face questions in the House of Commons today before visiting the Queen for his resignation. Theresa May is expected to be handed the job after that. Bank of Canada rate decision will be a main focus today and is expected to keep interest rate unchanged at 0.50%.

Currencies: GBP remains the strongest currency this week with the GBPUSD pair yesterday gaining over 300 pip and moving the most since May. Volatile pairs such as GBPJPY had even more extreme moves of 900 pips in 2 days as the range was 130.00 to 139.00. The reason for the surge in GBP has been the fact that the new Prime Minister Theresa May is seen as a favorite from the EU but also because by having her rival quit, Businesses no longer have to spend the next nine months awaiting the outcome of a leadership battle. On the other side of the globe, Japans JPY is the weakest currency with USDJPY rising from 100.50 to almost 105 on news that the PM wants to help the economy by adding more stimulus.

Stocks: Positive news out of UK, Japan and US helped the stocks continue their bullish run. The Dow Jones Industrial Average and the S&P 500 index on Tuesday both closed at fresh all-time highs, supported by a rally in energy shares and stronger-than-expected earnings from Alcoa Inc. Meanwhile, the S&P 500, set a fresh record Tuesday after closing on at a record for the first time in nearly 14 months on Monday. Japan’s Nikkei gained 1 %. Australian stocks added 0.3 % and South Korea’s Kospi rose 0.6 %.

Oil and Gold: Overnight, oil prices surged nearly 5%, buoyed by the latest report issued by the Organization of the Petroleum Exporting Countries’ (OPEC) which said that non-cartel production could drop by 800,000 barrels a day this year to 56.03 million barrels. The price of WTI rose yesterday by $2.5 per barrel, reaching $46.85 before falling to $46.30 at time of writing as investors fear supply data out of the U.S. today, may show inventory rises. GOLD suffered big losses as the metal dropped from $1357 to $1330 as investors shifted their funds to Stocks. The big support for gold is now $1320

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