Tuesday June 28, 2016 17:19
The U.S. dollar drooped against the British pound and the euro today as the currency market took a breather, engaging in some profit-taking after just two days of a brutal selloff in sterling and the euro sparked by the Brexit “yea” vote.
Nonetheless, the British pound is off 10% from the pre-vote level.
More importantly, the euro recovered a bit. It was last up 0.15% against the dollar at $1.1038 after hitting a 3-1/2-month low of $1.0909 on Friday.
However, the slightly weaker dollar was of no help to gold. Mostly on the back of regular trading, gold was down over $9.00 per ounce. Silver has managed for much of th day to stay in the green, rising about 5 cents per ounce.
West Texas Intermediate crude was up around 2.50% on the day, while Brent North Sea was up just a shade less. Some temporal issues arose, including a strike by oilfield workers in Norway and anticipation of another large draw down of U.S. stockpiles this week.
Those worries helped shore up an oil market that was in in freefall after the vote by Great Britain to exit the EU. Oil had been down by as much as 8.00% after the vote. So, as you can imagine, we saw quite a bit of bargain hunting that has pushed WTI up more than 2.25%.
There is a good deal of caution in the markets during this very modest risk-on day. A good indicator of it is that yields on the U.S. 10-year bond are basically flat lining, a status made even more telling because the yield already is so low.
So, the bond market seems to be calling for low rates even though that scarcely keeps bond purchases attractive as haven plays.
The migration away from the yen and back toward other currencies is another indicator that today is a risk on day, even if one of mild potency. Essentially what we are seeing is the swinging of an unpredictable pendulum as investors and traders try to determine what the actual damage – or lack thereof – from the Brexit will be.
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Source:Kitco
