Judgement Day

June 23, 2016

The one thing that is guaranteed overnight tonight is volatility, as the UK vote on EU membership has finally arrived. Polling stations close at 22:00 local time, with results then being counted across the 382 counting areas. The final result will be announced at the start of the European session tomorrow, but may become clear earlier should the results show a comfortable margin for one side or the other.

The market is priced towards the UK remaining in the EU, but not fully. Should we see this come to pass, then the currency will breathe a decent sigh of relief. For cable, this could see a move up to the 1.53-54 level. A vote to leave would be a more complex scenario. Cable could easily move down to the 1.32-33 area initially. We’d see some dollar safe-haven bid, together with sharp moves in both the yen and Swiss franc. The latter could be vulnerable to central bank action to quell the rise in the currency. Both central banks were happy to stand by ahead of the vote, but both are uncomfortable with the level of their respective currencies and the SNB is probably better positioned to do something about it. Japan would probably want some support from its G7 counterparts. As we know, the SNB do their own thing. In the Brexit scenario, we’d also see the government move to downplaying the risks to the economy, underlining the fact that nothing will change in the immediate future. Combine this with the intervention risks on safe havens, then cable could well bounce from the lows in the following hours and days.

But it’s not just currencies affected; equities have been dragged into the storm as well. On the ‘remain’ scenario, the FTSE could well jump to the 6,500 level (up just over 6%). As with the currency, the brexit scenario is a lot harder to determine. As we know, a good proportion of FTSE revenues come from overseas, so whilst some sectors will be hit harder (retailing, house-building), others should be more insulated. Still a 15% fall is still possible, down to the 5,300 level. Again, the government will talk up the economy and downplay the impact of the vote.

For now, it’s just a matter of waiting.

Publication source
FxPro information  FxPro reviews

September 30, 2016
The OPEC greases the wheels for oil
The global equities rally led by the gains in the energy sector after the OPEC members cut a deal in Algiers, despite the market scepticism and repeated statements that the Oil officials in Iran and Saudi Arabia are not able to find a middle ground in the current conditions...
September 30, 2016
Opec deal no certainty
In a huge surprise to the market, members of the Opec cartel agreed to cut production by as much as 700,000 barrels a day with some predicting that this may be the start of a new upward trend for oil...
September 30, 2016
Brent futures consolidated their gains
Brent rose in the European session after a surprised OPEC decision to cut oil output. Moreover, a draw in U.S. crude stocks gave an additional support for oil prices...

FXTM Rating
FXCM Rating
OctaFX Rating
HYCM Rating
Tickmill Rating
Fort Financial Services Rating

OptionFair Rating
IQ Option Rating
TropicalTrade Rating
OptionsXO Rating
OptionRally Rating
OptionTrade Rating