The U.S. Dollar is mostly down this morning following a sweeping sense of risk-aversion across global markets pushing up the value of safe-haven currencies. Brexit negativity is back on the table as investors predict a harsh negotiation process between the UK and the European Union.
The downside risks of separation to the global economy are only solidified by the problems plaguing Deutsche Bank, the Euro-zone’s largest bank. Also affecting market activity is perception of a highly contested election in the U.S. and the unknowns behind the potential presidency of Trump without government experience.
Chaos caused stock indexes to lose over 1.0% in Europe and Asian sessions. Commodity markets are also on the decline with oil prices swinging wildly over speculation about Saudi Arabia’s willingness to cut output at an OPEC meeting in Algiers. Without domestic data today, many stories will influence the greenback’s direction as we get the week started in North America.
The Pound fell over the weekend as fears of a problematic Brexit reignited uncertainty over the future of UK trade agreements with the rest of the continent. A survey of one hundred business leaders showed that more than 75.0% of CEO’s would move their headquarters or operations out of Britain if the UK was to abandon the trading bloc.
Business leaders and finance governors see a likely scenario where the UK gives up all access to the European free market in order to completely take control of immigration and avoid paying into it with fees. GBP has dropped by 3.7% in the past month.
The Euro sustained its gains from last week following the Fed’s decision to wait for a rate hike. Although the currency is holding on to its strongest level since mid-August, but may be in for a reversal considering the tenuous situation with banks across the continent. In addition to the ongoing Italian banking crisis, Deutsche Bank joins the ranks of a slumping institution with tax issues. German Chancellor Angela Merkel commented that she would not intervene or help in regards to the bank’s current troubles with U.S. authorities.