- Britain votes to LEAVE the European Union
- Japan’s service producer price index up by 0.2% vs. 0.1% expected, 0.3% previous
What a day for the U.K. and the forex market players! Here’s what you need to know before you begin trading the London session.
Britain votes to LEAVE the EU -Aaaand the leaves have it! The Asian session traders started their day with high hopes, as the early exit polls reflected leads for the “Remain” camp. GBP/USD hit a new 2016 high at the 1.5100 area while the Asian bourses climbed higher. Risk sentiment turned sour, however, when the rest of the votes came in and proved the early polls wrong.
With 52% of the total votes in favor of leaving the EU and with all of the votes counted, the “Leave” camp has won today’s historic referendum. Not surprisingly, the gloom-and-doomers flooded the financial markets and dragged high-yielding investments lower.
The pound plummeted by 10% against the Greenback and showed similar losses against its major counterparts. The risk aversion theme also boosted the safe havens and dragged high-yielding currencies like the comdolls lower.
In the stock markets, Nikkei closed with a 7% loss (after briefly triggering its circuit breaker), the Shanghai composite fell by 1.20%, Hang Seng lost 4.60%, and Australia’s ASX 200 dropped by 3.60%. Even the commodities didn’t escape the Brexit-related volatility with gold trading 4.80% higher, Brent oil down by 5.50%, and U.S. oil down by 5.65%. Yikes!
Right now all eyes are on the U.K. and central bank officials to see how they’ll react to the news. Word on the hood is that Angela Merkel is glued to her phone while Cameron will be resigning as PM.
What you need to pay attention on are the central bankers, who could join their hands and pull off coordinated currency interventions to provide liquidity and somewhat correct today’s market reactions. Heck, Japan’s Finance Minister Taro Aso has already warned that they’re ready to respond to the yen’s rise as needed while BOE’s Mark Carney is set to hold a presser in a few hours. Don’t even think of missing it!
Major Market Movers:
GBP – The pound fell down like a house of cards today following Britain’s decision to leave the EU.
GBP/JPY dropped by a whopping 2,205 pips (-13.99%), GBP/USD plummeted by 1,498 pips (-10.01%), and EUR/GBP rocketed by 538 pips (+7.04%).
JPY – The yen was king of pips during the trading session as traders flocked to the safe havens.
USD/JPY is down by 465 pips (-4.39%), EUR/JPY is down by 969 pips (-8.04%), and AUD/JPY is down by 628 pips (-7.79%).
Comdolls – High-yielding, commodity-related currencies saw collateral damage from the overall risk aversion that gripped the markets.
AUD/USD saw a 274-pip drop (-3.60%), USD/CAD popped up by 281 pips (+2.20%),and NZD/USD fell by 262 pips (-3.62%).
- 9:00 am GMT: German IfO Business climate (107.6 expected vs. 107.7 previous)
- 9:00 am GMT: Italian retail sales (0.2% expected vs. -0.6% previous)
- 9:30 am GMT: U.K. BBA mortgage approvals (37.9K expected vs. 40.1K previous)
- BOE Governor Mark Carney to give a speech. Watch out for any hints at policy changes after a Brexit vote!
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!