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Sterling dives as Brexit worries intensify

News Date: 22/2/2016 00:55:30
 
The British pound registered wide losses in Asian trade today after London's mayor Boris Johnson declared his support for exiting the European Union in a referendum that will be held in June. A British exit would send massive waves across Europe and the world and would likely wreck financial markets, pressuring sterling downwards and raising uncertainty worries over the future of Britain.

Sterling tumbled one percent against the dollar, before last trading at 1.4289, down 0.81% on the day, while sliding 0.64% versus its European rival, the euro, to trade at 1.2858. The yen similarly jumped to an eleven-day high against the British currency, before pulling back to hover around 161.26, up a strong 0.63% on the day.

From Japan, the Flash Manufacturing PMI slid in February to 50.2, from the previous reading's 52.0, which sent Japanese stocks down at the beginning, before reversing sharply higher, locking a gain of 0.84%. Chinese shares jumped more than two percent, while Australian shares advanced nearly one percent.

Oil prices recovered some ground after dropping four percent on Friday, buoyed by another fall in the U.S. rig count last week, but pressures remain on oil, as experts still predict Iran would raise its production volumes by nearly one million barrels in the next year to regain its market shares, exacerbating the global supply glut.

International benchmark Brent crude futures rose fifty cents, or 1.45% to trade at $33.49 a barrel, while U.S. West Texas Intermediate (WTI) crude futures added 63 cents from its last close price, or nearly two percent to hover around $32.39 a barrel, comfortably above the psychological level of $30 a barrel.

Wall Street closed with mixed results on Friday but locked in its biggest weekly gain this year, with Dow Jones ending down 21 points, or 0.13% at 16,391, while NASDAQ Composite rose a strong 16 points, or 0.38% to 4,504. S&P 500 was largely flat, closing at 1,917.

Investors wait for a wide array of data today, with Flash Manufacturing PMI for the Eurozone expected at 52.1 in February, barely down from 52.3 in January, which would be a mixed result for the common currency.

From the United States, also Flash Manufacturing PMI is forecast to come at 52.3 in February, a shade lower than January's 52.4, but still indicative of strong growth in the vital sector, which could buoy the dollar in the near term trading.

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