Daily Financial Markets Update: Brexit Warnings Weigh on European Markets


The Japanese yen has been one of the strongest performing currencies so far this week, as it got a boost from the G7 Summit and rumors that the BOJ is setting up to unwind its stimulus program. G7 leaders agreed to avoid competitive devaluation of their currencies to which Japanese Finance Minister Taro Aso agreed, calming yen traders’ fears of central bank intervention and allowing bulls to increase their long holdings.

USDJPY appears to have broken below the 109.50 minor psychological support, EURJPY is down to the 122.50 area and consolidating after its recent drop, CADJPY fell from 84.00 to the 83.00 mark, and NZDJPY found resistance at 74.50 and is down to 72.00.

Fresh wave of losses for AUD after RBA Stevens’ speech

The Aussie was sold off once more in today’s Asian session after Reserve Bank of Australia Governor Glenn Stevens reiterated their inflation-targeting focus, signaling that another rate cut could be announced if necessary.

AUDUSD fell from an intraday high of .7223 to a low of .7184, AUDJPY dropped to a low of .7861, EURAUD is up to 1.5581, AUDCAD is down to .9469, and AUDNZD is down to 1.0708. New Zealand has its trade balance due next and a smaller surplus of 25 million NZD is eyed compared to the earlier 117 million NZD surplus.

Traders are also pricing ahead of the Bank of Canada interest rate decision on Wednesday. No actual changes from the 0.50% interest rate is expected, although the central bank might seem more dovish after the wildfires in oil-rich Alberta. USDCAD is edging above the 1.3100 handle and EURCAD is trading at 1.4753.

GBP retreats on UK Treasury warnings

Despite some opinion polls showing a larger lead in favor of anti-Brexit supporters, the pound gave up ground to most of its peers when the UK Treasury warned of the repercussions of exiting the EU. Apart from emphasizing that a Brexit would result in a marked deterioration in economic security and prosperity, the Treasury specified that it would lead to job losses of as much as 820K, a year-long recession, and a decline in the pound’s value of around 15%.

GBPUSD fell to a low of 1.4443, GBPJPY dropped from the 160.00 area to the 158.00 support area, EURGBP popped up near .7750, GBPAUD tested support at the 2.0000 handle, and GBPNZD tested support at 2.1350.


To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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