Right now the U.S. dollar is the Energizer Bunny of currencies. The greenback climbed to 115.28 yen this morning. That’s the highest level since February 9. It also moved up against the euro, rising 0.7% to $1.0541.
No cut in interest rates. No expansion or extension of asset purchases. No nothing from the governors of the European Central Bank at today’s meeting
“It now seems plausible that uncertainty could remain elevated for some time,” Mark Carney, head of the Bank of England said today in his second televised speech since the United Kingdom voted to leave the European Union. “The economic outlook has deteriorated and some monetary policy easing will likely be needed over the summer”
Any post-Brexit crisis will will be a slow motion crisis driven by a gradual slowdown in economic growth in the United Kingdom, the European Union, Japan, China and the United States that results in a dimming of prospects for corporate earnings growth. The crisis will be interrupted periodically, as it has been in the last two days, by the hope that this time central banks will be able to intervene and get this or that economy growing again
The last time that the People’s Bank tried to pull off this balancing act was back in January 2016 when what looked like an extended trend of weaker fixings against the dollar contributed in a decline in emerging markets of 13.8% from December 28 to January 20.
The polls are in essence deadlocked in the June 23 vote on whether the United Kingdom should stay in the European Union or leave. That’s enough to create anxiety in the financial markets since no one can be certain how the referendum will come out. Adding to that anxiety is a sense that the polls may not be especially accurate this time around because of the demography of the vote
What had been up earlier this week was down today. U.S. stocks retreated with the Standard & Poor’s 500 stock index down 0.90% to move back below 2100 again. Emerging market stocks fell too with the iShares MSCI Emerging Markets ETF dropping 2.53%. Oil tumbled with U.S. benchmark West Texas Intermediate crude down 3.14% to $48.97 a barrel, below the closely watched $50 a barrel marker
The U.S. economy added only a net 38,000 jobs in May, according to the jobs report from the Bureau of Labor Statistics this morning. Economists surveyed by Bloomberg had projected job gains of 90,000 to 215,000 with the median forecast at 160,000.
