The end of this week has been very dark. European stock markets and the major stock exchanges rates (especially EUR/USD) feel approaching the referendum that will decide if the United Kingdom will remain or not into the Eurozone.
European shares, in deep red in Friday’s session, may soon usher in a new collapse in response to the result of the referendum on Brexit.
According to a stress test quoted by Bloomberg: “The European markets may lose about 24% – or a quarter of their current value – in reaction to the Yes output of the United Kingdom by the European Union”.
According to the test, to suffer more it will be the investments in sterling. They could fall to an average of 10%, more than how will drop the detainees’ placement in euro.
Enrique Diaz-Alvarez of Ebury – among Forex analysts surveyed by Bloomberg’s to define the aggregate market forecasts – believes that if the NO will win, the pound could quickly rise by 3-4% against the US dollar.
Based on these movements, the Ebury expects that the euro-dollar exchange rates will fall by nearly 2% in the case of a Brexit and in the case of the NO, it will go up by 0.5% -1%. This is also the major scenario priced by the market.
European stocks, notwithstanding the nervousness, still managed to stay calm ahead of the referendum on Brexit, despite the volatility on the pound has come at the highest of 2009.
Bloomberg test donated answers on what could happen in the short term, ignoring the structural aspect. However, the referendum is very close, we have to wait just a little more than week to find what will happen.
As for the main market movers of the week, we had already clarified in the previous article that there would not be many influential ones in this week.
As for the US, the University of Michigan released the preliminary version of the sentiment of consumers in relation to the month of June. The market mover shows that the sentiment of US consumers, in the preliminary version of June, it is down to 83.2 (the previous figure was at 84.9). The result disappoints the expectations of analysts, who gave sentiment to 83.8.
On Thursday was published the US initial claims for unemployment benefits. They fell in the last survey to 264 thousand units, against the 268 thousand reported in the previous report.
The continuing jobless claims in the US, after the previous figure of 2.172 units, was at 2.095 units (down from expectations of 2.171 units).
The US labor market data have led to volatility and uncertainty in the markets at the beginning of the week. Traders went back to take refuge in the yen, causing an appreciation.
The change has, however, taken up in favor of the euro after the words of Yellen and lives a new period of instability, especially in light of the last data released Wednesday night. On the night, in fact, it has been published quarterly GDP of Japan, after confirming the expectations and a path of modest growth, it led to a slight appreciation of the Japanese currency (+ 0.5%, up from the + 0.4% estimated last month).
The positive performance of the Nikkei (+ 0.93%), however, has also pushed euro-yen upward, retracing the movement later in the night and leaving uncertainty in the market.
The yen seems to be unable to find oxygen, pushed down by a market that now sees it as one of the safest havens and on which traders rely more.