Not much to report today. The post-Brexit data keeps rolling in, so far not great for the UK as expected, but all in all not terrible according to surveys for Germany and Belgium. This doesn’t mean that the Eurozone won’t be negatively impacted, but it’s what we’ve always known… the most direct impact surely has to be on the UK economy, and the second derivative impact on the Eurozone will be contingent on how bad the effects of Brexit will be on the UK economy.
Elsewhere we’ve seen some mixed data in Asia, with stronger than expected GDP data in Korea, but weaker industrial production data (and declining) in Singapore, and also weaker trade data in Hong Kong. While the trade balance in Japan does look better, this is primarily because of a slump in imports which doesn’t speak well for global trade. On the other hand, home sales in the US paints a picture of a robust economy, but again on the negative side, survey data for services in the US disappointed somewhat. A fairly mixed picture globally, but to be honest, mixed is better than some of the more dire predictions leading up to and following on from Brexit. It will probably take a few months of data to build up a case either way, on where the global economy is heading.
Major currencies still look to be trading in corrective complexes for the moment, but it’s worth noting that oil exposed currencies aren’t the best performers at the moment, whether you look at the Russian rouble, Nigerian naira or Mexican peso. For now, we maintain a slight bias towards a stronger dollar, if only because most of the easing bias is likely to come from central banks other than the US Federal Reserve. We’ll get to see that view tested later on today, with the FOMC decision in the European evening. The key question to come out of the meeting will be the Federal Reserve’s latest assessment of the US and global economies. That could set the tone for a currency market that has been largely range bound for the last week or so…
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