UK Market
The pound slumped over the weekend, hitting multi month lows of $1.198. Investors fear that risks of a ‘hard’ Brexit are becoming more likely. UK Prime Minister, Theresa May, is due to speak tomorrow regarding her negotiation strategies on leaving the EU. GBPUSD is currently trading at $1.20. Donald Trump announced that he would offer a trade deal to Britain to help ease the slumping sterling.
US Market
Donald Trump made striking comments in his interviews over the weekend. The president-elect expressed his belief that more countries would follow Britain and leave the European Union. Trump questioned the US acceptance of One-China policy and conveyed an interest in a nuclear deal with Russia. He suggested an ‘’insurance for all’’ health care programme which would replace Obamacare. Trump turned his attention to BMW, attacking their plans to build a factory in Mexico.
The market was mostly unperturbed by the comments. Unhinged by the sentiments investors have heard before, real movements in the market could have to wait for the Friday when the turnover from the Obama to the Trump administration will officially take place.
The Japanese Market
Since the election of Donald Trump and the consolidation of the bond market, USDJPY has strengthened. The Japanese PPI exceeded expectations. However, this failed to stimulate the Yen. The Japanese PPI rose 0.6%, the biggest gain since March 2014. Geopolitical concerns seem to be the main driver of the Yen as fears of a ‘hard’ Brexit and the Trump administration cast a shadow over the market.
Commodities
Crude oil rose 1.5%, and is now trading at $53 a barrel. As traders fear rising oil prices, many are buying more inventory before the price soars. Chinese imports of crude oil were up 13.6% in 2016, hitting a record high. For December 2016, imports of crude oil rose to 36.38 million tonnes in China. Chinese-demand is the main driver of the increase in the valuation of the commodity.
Gold rose %0.47 on the back of geopolitical fears. Investors are seeking refuge in the safe-haven commodity as they hedge against a ‘hard’ Brexit and the impending Trump inauguration. The commodity could see some striking movements tomorrow as British Prime Minister, Theresa May, is due to speak.
Market Watchlist
A weaker pound will make UK exports much cheaper, which could help UK businesses as foreign consumers look for a favourable exchange. Currently trading at 7281.50, up %0.20
News Today (all times GMT)
- US Market Closed for Holiday
- 18:30 – UK Bank of England’s Mark Carney to Speak