Pound Swooned With Brexit Developments, Japanese Yen Weak On Rising Stocks

Market Reviews

Japanese Yen declined. Greenback is weak as well while Asian stocks recoiled. China’s Shanghai SSE composite rose 1.9%, breaking 2800 handle. Nikkei increased 1.21% to 22052.18. Aussie is trading as the strongest. Loonie is firm, expecting a BoC rate raise.

The Pound is rather volatile as Theresa May (UK Prime Minister) announced some key points in UK-EU free trade area case, such as a common rule book for industrial and agricultural products. Britain promised to sign a treaty to ongoing harmonization with EU rules on products. For financial services, the UK wants regulations that maintain the mutual benefits of integrated markets and protect financial stability. May hopes Northern Ireland border problem could be avoided with such plan. Still, there are some bad news as David Davis (Brexit Minister) left his position because of the plan. He complained that “the general direction of policy will leave us in at best a weak negotiating position, and possibly an inescapable one.” And the “common rule book” with the European Union will give “control of large swathes of our economy to the EU and is certainly not returning control of our laws”. Minister in the Brexit department, Steve Baker, has also resigned.

Benoit Coeure (ECB Executive Board Member) claimed US trade protectionism “doesn’t have the potential to derail the recovery” of the Eurozone and its influence is so far “limited” and “the backdrop is very strong resilient growth in the Eurozone”. The ECB Executive Board Member hailed: “Europe united” against “America first”.

Haruhiko Kuroda, BoJ Governor, reassured that the Central Bank will drop its ultra-loose monetary policy with a short-term interest rates at -0.1% and the 10-year government bond yield around 0% only after inflation meets the 2% target. And, according to Kuroda, this could be very soon as the output gap improved and medium- to long-term inflation expectations grew. The Governor claimed: "Japan's economy is expected to continue expanding moderately.

China’s foreign currency reserves was up 0.05% to 1.5 billion dollars to 3.1121 trillion dollars. Japan current account surplus reduced 1.85 trillion yen in May. Bank lending increased 2.2% yoy in June. Swiss unemployment rate fell to 2.6%. German trade surplus rose to 20.3 billion euros in May. Today, Eurozone will publish Sentix investor confidence and Swiss will feature unemployment rate.