05 July 2016 at 23:02 GMT
US Data released
- Factory Orders-May (Actual -1.0% vs. forecast -0.9%, m/m)
It wasn’t a good day to be short US dollars. New York traders returning from their long Independence Day weekend, walked into a risk averse market, and joined the party. News of another UK commercial property fund suspending trading (M&G Investments) drove GBPUSD to 1.3002. Its subsequent bounce was of the dead cat variety.
Eurozone officials added to the woes when they warned that Spain and Portugal face sanctions for violating budget deficit rules. Full marks for timing. They had delayed the decision in mid-May because of the Brexit vote. The news took the opportunity to really unsettle markets. That news startled EURUSD out of its range and the single currency dropped to just 1.1060 from 1.1160.
Oil prices got whacked. Apparently traders are concerned that spillover from Brexit will impact global growth and therefore, global demand. Traders are concerned about a possible build up in US crude stocks this week, thanks to a private, Genscape report. Or maybe oil prices just followed the direction of the G10 currencies versus the US dollar. WTI started the day in New York at $47.55.barrel and finished at $46.88/b, after touching $46.30/b.
US equity indices closed in the red but the move appeared to lack conviction, especially if you are in the camp that believes US rates are not going anywhere in 2016.
That figures ... A possible build-up in US crude inventories and post-Brexit vote demand concerns have prompted a tumble in oil prices. Photo: iStock
– Edited by Robert Ryan
Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
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