Australian Dollar
As voting day progressed, markets grew increasingly confident that the UK would choose to remain a part of the European Union. Risk appetite remained on throughout the day, boosting the Australian Dollar against all of its peers, except the New Zealand Dollar. The ‘Aussie’ made particularly strong gains against the Chinese Yuan and the US Dollar. In the long term this could be problematic for the Reserve Bank of Australia (RBA), however, who have already warned that the ‘Aussie’ is overvalued, suggesting a further rate cut could be on the horizon.
There is no Australian data due out today, but the UK’s referendum results will be announced in preliminary form this morning, with the finalised version expected out around 5pm Melbourne time.
Sterling
The Australian Dollar’s strong advance eroded somewhat over the course of the day as the markets grew even more confident of a ‘Remain’ vote; enough so that even Pound Sterling got a boost. This was despite the news that city banks had allegedly prepared ‘war rooms’ and made sure cash machines were full in case of a rush to withdraw funds should the result be unfavourable. However, two polls showed a strong lead for the ‘In’ camp, with Ipsos Mori showing a 52-48% split and Populus putting the ‘Remain’ camp on 55% to the ‘Leave’ camp’s 45%. This meant that, out of the nine most recent polls on the referendum, seven indicated that ‘Remain’ would be victorious.
The results of the referendum will be staggered throughout the day, so there is plenty of opportunity for Pound Sterling movement.
Euro
A raft of disappointing PMIs kept the Euro weak yesterday, with market sentiment dragging on the common currency. Appetite for high-risk assets saw the Euro overlooked to begin with, although market confidence in a vote to remain saw the common currency regaining some ground. PMI results were disappointing overall, however. The French services and composite indexes both unexpectedly fell into contraction territory, while the German and Eurozone services and composite indexes also weakened further than had been predicted.
German IFO survey results are due out today, but these are only likely to have an impact if the UK referendum results have pointed to a vote to remain in the European Union, thereby taking the first step towards resuming business as usual.
US Dollar
A lack of safe haven demand saw the US Dollar slump yesterday, with even better-than-expected labour market data failing to boost the ‘Greenback’. Initial jobless claims were expected to fall from 277k to 270k, but instead dropped to 259k, while continuing claims fell from an upwardly revised 2162k to 2142k.
The US has high-impact preliminary durable goods orders figures for May set for release today. These are expected to show a -0.5% decline in orders on the month. Whether or not the data actually has an impact will depend largely upon how the UK vote goes.
Canadian Dollar
The Canadian Dollar was mixed yesterday, strengthening against the safer assets but losing out against its commodity correlated peers. Crude oil was on the rise, although West Texas Intermediate (WTI) oil made a couple of moves contrary to Brent – a highly unusual state of affairs – to weaken back below US$50 per barrel.
There is no Canadian data due for release today. If market confidence remains high thanks to a ‘Remain’ vote, crude oil could continue strengthening, boosting the ‘Loonie’.
New Zealand Dollar
Risk appetite saw the New Zealand Dollar trending bullishly yesterday, with global stocks also on the rise. Safe assets, such as gold, were on the decline. The markets overall were ignoring warnings of over-optimism, with the ‘Kiwi’ benefitting from traders positioning themselves on the assumption of a ‘Remain’ vote rather than waiting on the sidelines for the results to come in.
Like the Australian Dollar, market sentiment will dictate New Zealand Dollar movements today, with no New Zealand data on the calendar.
Data Released
June 24th 09.30 GBP Brexit Referendum: First Results (Approximate Time)
June 24th 13.00 GBP Brexit Referendum: Results 50% Counted (Approximate Time)
June 24th 16.00 GBP Brexit Referendum: Final Results Due (Approximate Time)
June 24th 18.00 EUR German IFO – Current Assessment (JUN) 114
June 24th 22.30 USD Durable Goods Orders (MAY P) -0.5%