Major Events of Last Week
Prominent analysts summarized this dramatic event by stating that sheer complacency had completely wrong-footed nearly all traders by seducing them into thinking that the ‘REMAIN’ option was already a done deal. However, such delusion was quickly swept away after early results disclosed a much stronger level of backing for the ‘LEAVE’ campaign than previously envisaged. Initial signs of concerns soon transformed into major rot after the ‘LEAVE’ choice quickly garnered unstoppable momentum before delivering one of the most astonishing political upsets for many generations.
Friday morning’s hangover and disbelief incited traders to adopt a very humble and cautious stance especially after discovering that global equities had shed practically $2 trillion in value overnight. The ensuing high levels of uncertainty will now almost certainly ensure that the US Federal Reserve will limit hiking its benchmark interest rates to just once at the very most during 2016. In contrast, a number of the world’s prominent central banks may now be forced into implementing additional monetary easing within the imminent future.
The traditional safety-first assets, such as gold and first-class government debt, all surged higher after the reality of a ‘LEAVE’ verdict finally became irrefutable. Gold rocketed by 5% while 10-year US Treasuries registered lows last posted over 4 years ago. Investor sentiment plunged amid escalating concerns that other Eurozone member states will now follow Britain by holding their own referendums. Essentially, the 30-year European single market experiment is now under such severe threat that it could be standing on the brink of disintegration. One of the first major casualties of the UK vote was the British prime minister, David Cameron, who resigned last Friday morning. He felt compelled to do so after leading the ‘REMAIN’ campaign to total disaster.
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What to Expect This Week
No major global events or data releases are scheduled for Monday.
On Tuesday, the USD will present the latest revision of its Gross Domestic Product (GDP) which should confirm that the US economy is now garnering momentum after a dismal start to 2016. A print above the expected 0.8% could provide the US Dollar with a firm boost.
The Eurozone will disclose a key ‘Economic Sentiment’ index on Wednesday which should provide vital insights into the current mood of the region’s businesses and consumers. This indicator is expected to hover about its 105.0 mark. Later, the USA will reveal its ‘Personal Income and Outlays’ for May which should surpass its prior reading of +0.4%. Japan will complete the session by delivering its ‘Industrial Production’ for last month. This parameter needs to report growth above +0.3% in order to demonstrate that the controversial monetary easing policies of the Bank of Japan (BoJ) are beginning to bear fruit.
Great Britain will launch Thursday by posting its latest GDP revision which should verify that its economy is still expanding, albeit at a modest pace. A positive outcome is required in order to help stabilize conditions following last week’s surprise exit from the European Union. The Eurozone will then publish a spate of key inflationary indicators. The Italian Consumer Price Index (CPI) should match its prior value of 0.3% while the ‘Harmonized Index of Consumer Prices’ (HICP) will help determined if European inflation is finally advancing towards the designated 2% target of the European Central Bank (ECB). Next, the USA will issue if ‘Jobless Claims’ for the week ending the 26th June which should confirm that the number of Americans filing first claims for unemployment benefits during that period continued to reside within the long-standing ‘250k-290k’ range.
On Friday, the European will again release prominent inflationary data which could influence the ECB’s future guidance policies. French PMI should rebound from its previous disappointing 48.4 by surpassing its critical 50 mark and progressing back into expansionary territory. German PMI should extend its recent growth trend by beating its key 52.0 level. The US Institute of Supply Management (ISM) will terminate the week by declaring its revered ‘Manufacturing Index’ for June. A result above 51.0 is required in order to demonstrate that US factory output is starting to emerge from the mire.
