London attacks send pound down as yen holds gains

A trader passes a customer his change at Whitechapel Market in east London.
A trader passes a customer his change at Whitechapel Market in east London.PHOTO: AFP

SYDNEY (BLOOMBERG) - The pound slipped on Monday (June 5) after a terror attack in London and the yen held gains that came Friday in the wake of a weaker-than expected US employment report. Stocks headed for a mixed start in Asia.

The pound fell 0.1 per cent to US$1.2872, paring a loss of as much as 0.3 per cent in early Monday trading.

The yen traded at 110.43 per US dollar as of 7:06am in Tokyo. Japan's currency climbed 0.9 per cent on Friday after the US data, when the Bloomberg Dollar Spot Index lost 0.4 per cent. The euro was at US$1.1280, five cents shy of the seven-month high it reached after the jobs report.

Futures on Japanese and Hong Kong stock indexes pointed to a mixed start, while contracts in Australia climbed in most recent trading. All of the equity futures closed before the London attacks.

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Gold was up 0.1 per cent at US$1,280.63, after gaining 1 per cent on Friday. West Texas Intermediate crude advanced 0.3 per cent to US$47.75 a barrel.

As investors weigh the implications of the latest terror incident at a popular London nightlife spot, the reaction in the British currency was muted. The euro was near its highest this year and the yen remained stronger they rallied at the end of last week after reports showed wage growth and hiring strength in the American labor market came in below forecasts.

Global stocks are at a record high as investors bet on improving global growth, driving the value of equities worldwide up by more than US$10 trillion over the past year. The World Bank forecast a modest pickup in growth despite uncertainty about monetary policy amid uncertainty among bond traders that inflation is waning.

While Federal Reserve policy makers will remain silent this week amid its self-imposed blackout period ahead of next week's rate decision, there's plenty on the agenda for traders. The highlights include:  Former FBI Director James Comey will testify before Congress following his dismissal by Donald Trump.

UK voters go to the polls Thursday. Surveys of voters over the past few weeks have indicated a tightening race, increasing the chance that Prime Minister Theresa May might not get the increased majority she's hoping for.

We're also expecting policy decisions from central banks in India and Australia during the week, as well as data on Chinese trade and inflation, US factory orders, European industrial output figures and GDP reports for Australia, Japan and the euro area.

Voters in Mexico's largest state went to the polls Sunday to cast ballots for a new governor in an election that's widely seen as a possible preview of next year's general election. Follow more on that vote here.

 

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