Dollar Surging Against European Rivals On Brexit Concerns
Leaving the single market without a deal and switching to World Trade Organisation rules would lower the GDP by 9.5 percent, a leaked Treasury document published by the Times showed.
‘The Treasury estimates that UK GDP would be between 5.4% and 9.5% of GDP lower after 15 years if we left the EU with no successor arrangement, with a central estimate of 7.5%,’ the paper said.
‘The net impact on public sector receipts – assuming no contributions to the EU and current receipts from the EU are replicated in full – would be a loss of between £38bn and £66bn per year after 15 years, driven by the smaller size of the economy,’ the treasury warned.
There was no U.S. economic data to drive trading this morning. Investors are hoping that the minutes of the most recent Federal Reserve meeting, which will be released Wednesday afternoon, will provide some clues regarding the outlook for interest rates. Traders are also looking forward to the release of the retail sales report and the producer price index at the end of the week.
The dollar has climbed to around $1.2115 against the pound sterling Tuesday afternoon, its lowest level since the flash crash last Thursday. The flash crash brought the pound to a 31-year low, below $1.20.
Like-for-like sales in the United Kingdom were up 0.4 percent on year in September, the British Retail Consortium said on Tuesday. That beat forecasts for a decline of 0.3 percent following the 0.9 percent decline in August.
The buck has jumped to a 2-month high of $1.1050 against the Euro Tuesday afternoon, extending the gains of the previous session. The dollar ended the previous trading week around the $1.12 level.
German investor confidence improved strongly in September, suggesting robust economic activity despite political and economic risks such as the recent troubles of the banking sector, results of a key survey showed Tuesday.
The ZEW Indicator of Economic Sentiment, which measures investors’ expectations for the German economy in six months’ time, rose to a four-month high of 6.2 from 0.5 seen in each of the previous two months, the Mannheim-based Centre for European Economic Research said.
Economists had expected a score of 4. The latest reading was the strongest since June’s 19.2.
The greenback has pulled back to around Y103.225 against the Japanese Yen this afternoon, from an early high of Y104.068.
Japan had a current account surplus of 2,000.8 billion yen in August, the Ministry of Finance said on Tuesday. That exceeded forecasts for a surplus of 1,502.7 billion yen following the 1,938.2 surplus in July.
A measure of peoples’ assessment of the Japanese economy decreased unexpectedly in September, after rising in the previous two months, survey figures from the Cabinet Office showed Tuesday. The current index of Economy Watchers’ survey fell to 44.8 in September from 45.6 in the previous month. Meanwhile, it was forecast to rise to 45.8.
Copyright RTT News/dpa-AFX