Article Highlights

  • French INSEE manufacturing confidence: 102 vs. 103 expected, 104 previous
  • French flash manufacturing PMI: 47.9 vs. 48.7 expected, 48.4 previous
  • French flash services PMI: 49.9 vs. 51.6 expected, 51.6 previous
  • German flash manufacturing PMI: 55.4 vs. 52.0 expected, 52.1 previous
  • German flash services PMI: 53.2 vs. 55.0 expected, 55.2 previous
  • Euro Zone flash manufacturing PMI: 52.6 vs. 51.4 expected, 51.5 previous
  • Euro Zone flash services PMI: 52.4 vs. 53.2 expected, 53.3 previous
  • Euro Zone flash composite PMI: 52.8 vs. 53.0 expected, 53.1 previous
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Today is Brexit referendum day. And while markets tend to behave during major events, that was not the case today since betting odds favored a win for the “remain” camp, which caused a frenzy of risk-taking during the morning London session.

Major Events/Reports:

Brexit referendum underway – Today’s the day the we’ve been waiting for, forex friends! Will Britons vote to stay in in the E.U. or will they vote to get out? Price action and the intense risk-taking implies that the market thinks that the “remain” camp will win, but will they? Make sure to read up on Forex Gump’s 5 Things to Remember If You’re Trading the Brexit Vote, if you are indeed planning to trade the event.

Last minute Brexit polls – Two Brexit polls were released during the morning London session and the fieldwork on both polls were done yesterday. The first poll was conducted by Ipsos Mori and it showed that the “remain” camp had a slight lead at 49% versus the “leave” camp’s 46%, with 5% undecided. If the undecided are stripped away, the “remain” has 52% while the “leave” camp gets 48%. The other poll released during the session was conducted by Populus and it showed that the “remain” camp had a more commanding lead at 55% versus the “leave” camp’s 45%.

Risk-on frenzy – Markets usually calm down during major events, but that’s not the case for today’s Brexit referendum, since there was plenty of risk-taking activity during the morning London session, with the pan-European FTSEurofirst 300 up by 1.47% to 1,362.18, the blue-chip Euro Stoxx 50 up by 1.29% to 3,037.50, the U.K. FTSE 100 up by 1.26% to 6,340.00, and the DAX up by 1.83% to 10,255.00 by the end of the session.

Even U.S. equity futures were in on the fun, with the S&P 500 futures index up by 0.93% to 2,096.00 and the Nasdaq futures index up by 0.96% to 4,436.88. And as has been the case for the past few sessions, market analysts are attributing the risk-on vibes to betting odds favoring a win for the “remain” camp.

Major Currency Movers:

GBP – The pound was the mightiest currency during the morning London session, trampling all other currencies that tried to stand against it. And the pound’s source of strength during the session was, of course, being attributed by market analysts to expectations that the “remain” camp will emerge victorious.

GBP/USD was up by 113 pips (+0.77%) to 1.4868, GBP/JPY was up by 283 pips (+1.84%) to 156.78, GBP/AUD was up by 80 pips (+0.41%) to 1.9660

JPY – The very risk-friendly environment was not friendly at all against the safe-haven currencies (JPY, CHF, USD), but it was openly hostile to the yen since the yen lost out terribly to all its forex rivals.

USD/JPY was up by 110 pips (+1.04%) to 105.52, CHF/JPY was up by 146 pips (+1.34%) to 110.47, CAD/JPY was up by 127 pips (+1.56%) to 82.83

EUR – With all that risk-taking, you probably assumed that one of the higher-yielding comdolls would end up as the second strongest currency of the session, right? Nope! That distinction goes to the lower-yielding euro, although the euro barely edged out a win against the comdolls. Demand for the euro was likely fueled by the market’s expectations that the U.K. will stay in the E.U., which is gonna be good for the E.U. economy as well. The U.K. is the second largest economy in the U.K. after all.

EUR/USD was up by 52 pips (+0.46%) to 1.1390, EUR/JPY was up by 178 pips (+1.50%) to 120.19, EUR/CHF was up by 20 pips (+0.18%) to 1.0883

Watch Out For:

  • 12:30 pm GMT: U.S. initial jobless claims (270K expected, 277K previous)
  • 1:45 pm GMT: Markit’s U.S. flash manufacturing PMI (50.9 expected, 50.7 previous)
  • 2:00 pm GMT: U.S. CB leading indicator (0.1% expected, 0.6% previous)
  • 2:00 pm GMT: U.S. new home sales (561K expected, 619K previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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