Investors are once again investing after the shock of Brexit, pushing the prices upwards in most of the major markets.
There is a coin in particular, however, that has received only negativity from Brexit and it is the euro. The euro-dollar exchange rate is changing and the European currency is losing its character as a safe haven, exploded as a result of the increase of QE in last March.
All this is confirmed by the fact that the euro does not rise anymore with the increase of the risk and market fears.
One of the possible causes of this report is that ECB has made the euro more attractive as a funding currency with the QE and the large number of placements makes the currency susceptible to large movements during periods of risk aversion.
Talking about ‘Europe’, the Bank of England met for the first time after the Brexit to take a decision about interest rates. With a big surprise for the market, that believed in a rise, the BOE left the interest rates unchanged at 0,50%.
This news has lifted the fortunes of the pound. However its fate remains tied to the August meeting and the shadow of depreciation has not yet disappeared.
As for the United States, the monthly index of import prices in June marked a + 0.2%, against the previous 1.4%. The monthly index of export prices, on the other hand, amounted to + 0.8% against the previous + 1.2% (revised up).
In the wake of the improving macro data in the US and the hope for an increase of monetary stimulus to the economy by central banks, Asian markets have moved closer to the maximum of 2016 in Wednesday session.
The MSCI’s Asia-Pacific (excluding Japan) marked a rise of 0.4% to 427.83 points, just below the highs of 2016 to 428.22 hit last April.
The Nikkei closed up +0.84% of the gains after scoring more than 1% for most of the Asian session.
The Australian Stock Exchange gained 0.5% while South Korea marked a 0.6%
In Japan, Prime Minister Shinzo Abe ordered a new round of spending to stimulate the economy, as expected, after an election victory on Sunday.
On Tuesday, Shinzo Abe has met former Federal Reserve Chairman Ben Bernanke, known as a supporter of the Helicopter Money – which involves printing money for a direct delivery to the private sector to stimulate the economy. This meeting fueled speculation about the fact that Abe’s stimulus plan could be financed by a new monetary easing by the Bank of Japan.
The entry has pushed down the yen by about 4% in the past two days.
The award for the most amazing market mover of this week goes to Ireland’s GDP. In 2015, Ireland’s GDP grew by 26.3%. This is the information communicated by the Institute of Irish statistics, which has revised upwards the calculations of the Gross Domestic Product for the year of 2015, initially estimated to the already surprising 7.8%.
Mind-boggling amounts are reminiscent of the Chinese boom. Must we trust these numbers?