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20.06.2016 18:19

American focus: the US dollar significantly depreciated against the British currency

The US dollar strengthened against the euro, recovering all the ground lost in the first half of today's session. The probable cause of this trend are the technical factors and changes in risk appetite. Market participants are also preparing for the performance of Fed Yellen in Congress - on Tuesday it will submit semi-annual report in the Senate, and on Wednesday - in the House of Representatives. Investors are waiting for her comments on the timing of interest rate rises. Today futures on interest rates Fed indicate that the probability of a rate hike in July is 10%. The chances of an increase in rates are estimated at 37% in September.

In addition, the course of trading influenced the Bundesbank monthly report, which stated that the ECB's asset purchase program could support the euro zone economy, but the ECB must normalize policy once inflation returns to the target level. The Bundesbank said that its economic model confirms the experience of other currency areas, according to which QE can have a stimulating effect on demand and inflation, however, are associated with exposure to large uncertainties. Bundesbank reiterated its concerns related to the program of QE, noting that it weakens the government budgetary discipline eurozone countries, may lead to risky behavior and reduce the profits of banks.

The focus of the application were also a member of the Governing Council of the ECB Joseph Makucha. "Out of Britain from the European Union could lead to political instability inside the block and slow down the further integration of the referendum may also lead to financial market volatility, but the ECB will act to reduce the volatility of the market, as has been done many times in the past." - Said Makuch.

The British pound rose more than 2 percent against the US dollar, reaching a peak on May 31 as the results of surveys signaled to strengthen among the British desire to remain part of the European Union. The survey company Survation revealed that EU membership voted 45% of voters and 42% of the vote for the exit. The median forecast on the results of six recent public opinion polls have shown a 50 percent probability of a positive or negative outcome of the referendum, while the bookmakers betting in the UK out of the EU have fallen sharply compared with last week. Now bookmakers estimate the chances Brekzita in 31% versus 44% in the middle of last week.

Overall, this week could be very unsaturated in terms of economic data for the UK, if not the historic referendum. Voting in a referendum will end on Thursday at 20:00 GMT, and the results will be announced at 02:00 GMT on Friday. If the majority of citizens will vote for secession leaders of the European countries and organizations planning to hold a series of emergency meetings to calm markets and prevent a domino effect in the weaker economies.

Market Focus

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  • Earnings Season in U.S.: Major Reports of the Week
  • German private sector output growth slowed for the second month running in July
  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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