The vote on the Brexit referendum is casting a dark shadow over the UK economy. “Uncertainty about the EU referendum caused customers to hold back on purchases, exacerbating already weak demand,” said Chris Williamson, Chief Economist at Markit. Confidence in services has fallen to its lowest level in over three years, coming on the heels of dismal manufacturing and construction figures earlier this week. This morning, the pound dropped 0.3% from yesterday.
Oil prices are gaining for the second day after figures showing that US production has fallen to its lowest level in over a year.
The wildfires raging through oil-rich Alberta may further slash output. While OPEC’s failed meeting last month left countries without a consensus on a supply freeze, some analysts are predicting a tightening of fundamentals toward the end of 2016.
In the US, tomorrow’s job report is the big data point and question mark. Speculations about the dollar’s recovery and a possible rate hike continue to abound, but one thing remains certain: currencies are highly sensitive to central bank action, or the lack of it. In Australia, the appointment of a new central bank chief followed the unexpected decision to cut interest rates to a new low; the appointment and rising oil prices are resulting in a lift for the Aussie dollar.