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EU Calls For Quick Brexit

Published June 28, 2016
  • Financial markets are much calmer this morning as two days of relentless selling pressure has subsided 
  • Equities in Asia were flat while stocks across the European continent and the UK rose after falling as much as 10% since Friday
  • Oil prices are higher as well with WTI trading up 2.7% to $47.60 a barrel
  • However the pop in oil has only marginally helped the Loonie as USDCAD continues to trade above the 1.3000 handle, well above last week's lows in the mid 1.2600's
  • The British Pound finally found a buyer or two out there and is 1.5% higher against the USD, cutting its cumulative losses since Thursday evening to a mere 10.65%…
  • …UK gilt yields rose as well amid the bounce in risk assets but remain below the 1% level from 1.4% prior to the referendum highlighting the level of extreme trepidation surrounding Brexit as traders rushed into the perceived safety of UK government debt…
  • …which is ironic given that all major credit rating agencies have now downgraded UK's debt to sub AAA
  • And to put a cherry on top of it all, EU leaders at this week's two day summit in Brussels have banned outgoing UK PM David Cameron from Wednesday's meetings and urged the UK to quickly solidify its exit strategy from the EU in order to belay fallout
  • Amid the turmoil, we received relatively strong U.S data this morning highlighted by a better than expected final reading of Q1 GDP which came in at 1.1% compared with 1% forecast
  • However, the Fed's favoured reading of inflation, core PCE prices, increased at a 2% pace during the first quarter which was slightly below the 2.1% expected and likely strengthens the case for the Fed to push the pause button on near term rate hikes
  • USDCAD continues to trade above its key 21 day moving average (DMA) as sentiment favours USD bulls with dips below 1.3000 seen as buying opportunities for those short US Dollars

USDCAD Chart: USD bulls in charge above the key 21 day moving average at 1.2893 (white).