Dollar Declines with Risk Appetite on Brexit

The U.S. dollar declined for a second session Wednesday vs. Euro and GBP, as global worries about the impact of last week’s Brexit vote on financial markets eased.

U.S. dollar index fell by 50 pips and traded at 95.70.

The British pound advanced vs. USD and traded at $1.3531. Despite a modest bounce, GBP plunged to its weakest level since the mid-1980’s on Monday and remains near a 31-year low.

From a technical point of view, the pound is likely to continue its volatility between $1.35 and $1.33 during the course of the week. Euro removed and traded at $1.11. From a technical point of view, the single currency could continue its recovery as worries from Britain's EU leave vote eased, but it could trade at $1.12, which is the best scenario.

U.S. dollar pared its losses vs. Japanese Yen and traded at ¥103 in conjunction with the rise in U.S. stocks. The pair could settle at ¥103 but it depends on the market reaction to the referendum result.

On Wednesday, Gold settled at $1,320 and could decline to $1,300 during the course of the week, paving the way for a further rise in prices during the coming period.  

Oil prices were positively affected by risk appetite on Brexit and the Norway strike threat. WTI traded above $49.50 and could re-test the psychological level of $50.

The most important economic events:

• EUR Euro-Zone Consumer Price Index Estimate (YoY) (JUN): (GMT 11:00) Important – Forecast (0.0%) – Previous (-0.1%).
• EUR Euro-Zone Consumer Price Index - Core (YoY) (JUN A): (GMT 11:00) Important – Forecast (0.8%) – Previous (0.8%)
• CAD Gross Domestic Product (YoY) (APR): (GMT 14:30) Important – Forecast (1.4%) – Previous (1.1%)
• BOE's Carney Speaks in London: (GMT 17:00) Important

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.