Market themes centralised on Brexit and weak greenback - BBH

Analysts at Brown Brothers noted the theme in the current FX space being a weaker dollar and Brexit risks.

Key Quotes:

"The US dollar traded heavily in the first few days of last week as investors continued to respond to the poor employment report.   However, Yellen's willingness to defer judgment while noting the underlying economic strength, JOLTS and the initial jobless claims, coupled with the ongoing anxiety over the June 23 UK referendum helped the dollar recover in the second half of the week.   

Although four central banks meet and there are numerous economic reports, there are two main events that will drive the foreign exchange market.  The first is the FOMC meeting.  The shockingly weak job growth dashed whatever lingering odds of a move next week.  The key then is not what the Fed does but what it says. How much does the Fed keep the July meeting alive?  Does it back away from the two rate hikes the median official dot plot suggested was appropriate in March?  

The other driver is Brexit.  The polls show a very close race.  The event markets show a shrinking but still healthy lead (2:1) for remaining.   Sterling has not performed as poorly as one would have imagined.  It is off 2.6% this year against the dollar, but the losses were suffered prior to the focus on the referendum.  Over the past two months, sterling is up 0.6%.  It is not much, but only the Canadian and New Zealand dollars and yen have outperformed sterling over this period. "