Monday July 4: Five things the markets are talking about
Happy 4th of July!
Stateside, this is a holiday shortened trading week, one that will be dominated by two fundamental events – Wednesday’s FOMC minutes and Friday’s non-farm payroll (NFP) report for June. With no surprises expected in the minutes, both dealers and investors have very much priced out any possibility of a U.S rate hike occurring within the next 18-months. In respect to the jobs report, is it possible that the U.S can print two disappointing numbers back to back?
Fundamental’s aside, trading will continue to be dominated by the U.K’s Brexit vote outcome. With the market remaining in a state of confusion over the future of the U.K’s relationship with the E.U, the initial reaction being one of shock and panic selling, the market seems a tad confused how to proceed with the lack of political clarity, both domestically in the U.K and amongst its fellow European partners. Expect this to be the new norm for the foreseeable future.
1. Pound falls, but other risky currencies gain
Sterling continues to trade under pressure this morning after data shows a drop in U.K. construction sector activity in June (construction PMI 46 vs. 50.6 – first contraction in 40-months). The pound is down -0.2% at £1.3254.