Weekly Report

Market analysis

Date: Tuesday, 28th of June 2016

Highlights:

• EUR/USD : Rallying to a three-month peak fueled by the U.K. surprise decision
• GBP/USD : Pares some losses after Brexit win pushes Pound to 31-year low
• USD/JPY : Surges on safe-haven demand, pound off 30-year lows
• USD/CAD : Pares gains but hovers close to 3-week highs
• Gold : Retreats from 2-year high, as markets react to Brexit victory
• Crude Oil : Tumbles 4%, as markets assess resounding Brexit victory

EUR/USD

Rallying to a three-month peak fueled by the U.K. surprise decision

The euro fell to fresh three week lows against the pound on Tuesday despite data showing that German economic sentiment improved this month, amid growing expectations for a U.K. vote to remain in the European Union on Thursday. The ZEW index of German economic sentiment rose by 12.8 points to a reading of 19.2 in June. The improvement indicated that financial market experts have confidence in the resilience of the German economy. On Wednesday the dollar remained lower against the euro, after the release of positive U.S. new home sales data as investors prepared for the British vote on a potential exit from the European Union, or Brexit, due the next day. The National Association of Realtors said that existing home sales rose 1.8% in May to 5.53 million units from the 5.43 million units in April that was revised from the initial read of 5.45. The consensus forecast was for a 1.1% increase to 5.54 million units. Separately, the International Monetary Fund said the U.S. economy was "overall in good shape" and expects U.S. growth to be 2.2% in 2016 and 2.5% in 2017. A swing in bookmaker odds towards Britain choosing to remain in the EU, following the murder of a British lawmaker last week, helped boost currencies like the Australian and New Zealand dollars, considered riskier investments because of their ties to commodity prices.

On Thursday the dollar trimmed losses against the euro , after the release of better than expected U.S. jobless claims data, but the greenback still remained broadly lower as the British referendum on a potential exit from the European Union continued to dominate. The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending June 18 declined by 18,000 to 259,000 from the previous week’s total of 277,000. Analysts expected jobless claims to fall by 7,000 to 270,000 last week. On Friday the dollar remained broadly higher against euro, after pulling back from a three-month peak fueled by the U.K. surprise decision to leave the European Union in a historic referendum. The pound broadly weakened after the U.K. voted by a substantial margin to leave the EU in a landmark referendum, with the Leave side winning 52% of the vote, against 48% to remain.