BBC, ITV and Sky TV have declared a victory for Leave after nearly 25 mln votes counted, suggesting the election is past the point of no return in terms of the vote count. Japan’s Nikkei 225 is now doubled losses to -8.2% even as dollar-yen consolidates over 101.00 after likely BoJ intervention near 99.08 lows earlier. Nikkei futures have declared a circuit breaker as a result. Cable is back down to lows of $1.34 and gold has tacked on another $38 to $1,338 after trespassing back above $1,300 after the initial vote counts. Time to drink everytime someone on TV says “Brexit.”
Cable printed 1.3467 lows, levels last seen in 1985, down better than 10% from earlier highs. Granted, traded volumes are vaporous, though with Brexit votes apparently edging further into the lead, sterling’s levels appear to reflect the realities of the situation. The key 1.3500 is now critical.
EURUSD printing three month lows of 1.0945 on prospects for Brexit. The pound of course, has been the biggest loser, though it appears the markets are waking up to the idea that a U.K. “leave” opens up a potential, if not certain can of worms for the Continent and the EU. Further ECB easing is the current buzzword (with BoE almost certainly to move to ease should the Brexit outcome come to be).
Gold futures are on two-plus year highs near $1,362.50/ounce, and up 7.5% on the session, as U.K. media outlets call a Brexit win. Meanwhile, WTI crude futures are down 6%, trading down $3/bbl to $46.75/bbl lows. Risk-off is in high gear, and if Brexit is concerned, capitulation trades can be expected before cooler heads prevail.
USDJPY fell to 2.5 year lows, printing 99.00 as risk appetite evaporates on the Brexit outlook. Since then, the pairing rallied to nearly 102.00 in a blink of an eye, with the obvious culprit being BoJ intervention. No confirmation at this point, but the BoJ and MoF cannot be happy with current developments.
Brexit – A truly fundamental seismic economic and political event which will reverberate around global markets for months to come. I expect to writing about recession and deflation much more frequently in the coming months.
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