Brexit Impact Beyond the UK
- Aussie, Canadian Dollars rose as Yen fell after failure of Turkey coup attempt
- NZ Dollar drops after disappointing CPI data fuels RBNZ rate cut speculation
- ZEW and PMI surveys, ECB rate decision may offer clues on Brexit spillover
The sentiment-linked Australian and Canadian Dollars rose alongside share prices while the anti-risk Japanese Yen fell at the start of the trading week. Financial markets appeared to be breathing a sigh of relief after an attempted military coup in Turkey over the weekend seems to have failed.
The New Zealand Dollar failed to capitalize on the risk-on mood, sinking after disappointing second-quarter CPI data fueled RBNZ easing speculation. The report put the benchmark year-on-year inflation rate at 0.4 percent, lower than the 0.5 percent expected. The central bank will update its economic outlook this week, which investors think may pave the way for a cut.
Looking ahead, the aftermath of the UK Brexit referendum remains a critical macro theme in the week ahead. With the threat of a financial crisis immediately following the vote seemingly out of the way, investors have turned their attention to gauging the severity of knock-on effects on global economic growth and financial stability.
Needless to say, the Eurozone is ground zero for spillover. Germany’s ZEW survey of investor confidence, the flash Eurozone PMI roundup from Markit Economics will hint at the severity of the cooling effect felt on the Continent. The ECB monetary policy announcement will offer early clues about what policymakers may do about it.
--- Created by Ilya Spivak, Currency Strategist for DailyFX.com
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