I wrote on Wednesday about the implications of Brexit, we have seen these played out this morning as the major risk on day yesterday was suddenly and dramatically reversed overnight as the UK shocked markets with its Brexit vote. GBPUSD reversed from north of 1.5000 to sub 1.3300 – a huge unprecedented 1700 pip move in the space of a few hours.
The safe havens of Japanese Yen, Swiss Franc and GOLD have all rallied strongly this morning. The SNB has intervened in EURCHF, propping the cross to around 1.0800 after earlier logging a 10-month low at 1.0623. The central bank stated that it has “intervened in the foreign exchange market to stabilize the situation and will remain active in that market.” The SNB said last week after its quarterly policy review that it has been monitoring the impact of the Brexit issue on the “significantly overvalued” franc.
The BOJ remains quiet but the break of the 101.90 – 100.90 level I identified on Wednesday was dramatic (breaking 99.00 and touching 98.80) but relatively brief and generated a lot of buying and the bounce to the 103.00 level. So whether there was intervention here we do not yet know, however, I repeat my comments from Wednesday – Further down 98.20 and even 95.00 are not unrealistic. In an uncertain post Brexit world risk off would prevail for some considerable time.
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