Aftershocks following Brexit continued on Thursday as the Bank of England Mark Carney said a rate cut was imminent. Carney did not mince words in a speech on Thursday, saying that in his opinion "the economic outlook has deteriorated and it is likely that some relaxation of monetary policy is required during the summer." Given the financial turmoil caused by Brexit, markets expected a rate cut in the coming months, but the strong comments Carney market sentiment deteriorated. The pound reacted negatively, as the GBP / USD fell 120 points. As expected, the pound loss after Carney's comments have been earning gold, as lower interest rates make gold more attractive. Gold has risen 1.2% since Wednesday. The metal has been one of the big winners of the Brexit consultation, and enjoyed a spectacular rise in June of 8.6 percent. With the uncertainty in commodity markets and ongoing currency, the gold rally could continue until next week.
With financial markets focused on the impressive vote Brexit understandably, the Federal Reserve and future currency movements have passed into the background. That could change next week as Fed Chairman Janet Yellen will deliver a speech in Philadelphia. You will need to provide some clue about a movement of rates? Yellen and her colleagues have sounded cautious about the US economy, and unless we see employment figures and stronger inflation in the second half of 2016, the Fed may remain on the sidelines until 2017. Gone are the heady days last December, when the Fed raised rates and hinted that there was more to come in 2016, maybe even four increases. In a nutshell? Traders should not expect an increase of imminent rate to boost the US dollar; rather, the direction of the currency will be largely dependent data - the Fed is unlikely to budge unless we see employment figures and significantly improved inflation.
It has been exactly one week since the historic referendum that saw the British electorate vote to leave the EU after 40 years. Brexit The vote to leave the EU has caused profound instability in Europe and the UK and finish with a staggering $ 3 trillion from global stock markets. As the dust has begun to settle, however, financial markets have stabilized. The pound plummeted to 11 percent in the aftermath of the vote, but has stabilized in recent days. However, political leaders from both sides of the Canal will have to pick up the pieces and deal with the new radical scenario that was unthinkable only a few months ago - that of a European Union without the United Kingdom. British politics have tried to calm public opinion and the markets, but sharp fall in the pound on Thursday stressed that the situation is anything but normal. the political image of the country is fluid, as the Conservatives are choosing a new leader, the Working Group is in crisis and elections can not be far behind. In the financial sphere, the pound and the markets have taken a beating and London's position as a global financial center has been shaken. The uncertainty will not disappear in the short term, so that operators can expect more volatility in the currency markets.
The British Prime Minister Cameron was in the unenviable position of fuming meeting with European leaders at the EU summit this week. Cameron asked for time to prepare for departure from Britain and wants to renew the "productive" relations with Europe. However, Europeans are in no mood for hugs and kisses on both cheeks, and the "divorce" century "between Britain and the EU could be spiteful and messy. German Chancellor Merkel said that the UK does not could "cherry pick" and that a relationship with Europe entails obligations and not only rights -. in other words, Europeans are rejecting "half members" Europe also wants Britain to leave as soon as possible, with in order to minimize uncertainty and instability caused by the vote Brexit. French President Hollande wasted no time going on the attack, saying that London should no longer remain a center of operations for cleaning euros. This market it is worth billion in foreign exchange and derivatives and offers of this measure would be a blow to the financial sector in London. Now, the European Banking Authority has announced that leave London and move to Paris or Frankfurt. In a strictly legal sense, Britain remains a member of the EU club, but politically, is persona non grata (British EU Commissioner Jonathan Hill resigned shortly after the Brexit vote). Markets are allergic to uncertainty, so it is not clear the state of Britain in the EU could boost gold prices.
/ USD XAU Basics
Friday (July 1)
9:45 US Final Manufacturing PMI. 51.4 estimate
10:00 ISM Manufacturing PMI. 51.3 estimate
10:00 spending on US construction. Estimate 0.6%
10:00 ISM manufacturing prices. 63.9 estimate
All day - US vehicle sales in total. estimated 17.3 million
* Key Announcements are highlighted in bold
* All times are EDT release
XAU / USD for Friday July 1, 2016
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