INSIDE G-10: Pound Rebounds Ahead of FOMC Amid Brexit Debate
(Bloomberg) -- The pound bounces off recent lows as markets take a breather from Brexit-driven selling ahead of central bank meetings this week.
- European stocks gain as flight to safety pauses; CHF, JPY, SEK fall vs USD
- Volatility risk premium for G-10 FX, as measured by difference between 3-mo. implied and realized volatility, rose to highest since June 2012 yesterday
- MSCI decides against including A-shares in EM index; CSRC says decision won’t affect China capital market reform
- GBP/USD +0.4% to 1.4171, trading near session high
- Scope for recovery limited after recent breakdown below February trendline support; resistance 1.4192, support 1.4091
- Cluster of large option expiries today may limit price action in GBP
- U.K. Chancellor George Osborne says markets are warning against the consequences of Brexit
- An updated list of banks forecasts in Brexit, and remain scenario here
- EUR/USD little changed at 1.1213 vs 1.1190-1.1229 range
- Resistance is 1.1316/21, 55-DMA and June 10 high with support at 1.1173
- Euro downside protection rising following a bounce in favor of Brexit as volatility premium versus cable bets hits record highs
- BBDXY -0.1% to 1,188.29 ahead of the FOMC decision later today
- Goldman Sachs says Fed likely to downgrade long-run target rate of its hiking cycle by 25 bps to 3%
- The FOMC doesn’t want to take a summer vacation: TRADER’S NOTES
- USD/JPY +0.1% to 106.25 vs 105.94-106.34 range
- Pair rises for first time in four days, stays below 10- DMA now at 107.00
- Yen and volatility begin to stabilize as investors adjust positions before Fed and BOJ meetings, Bank of America says
- Brexit risk to keep fueling yen rally while BOJ is seen on hold this week; see preview
- EUR/SEK up 0.1% to 9.3237 after inflation expectations report
- SEK set to outperform European peers heading into the second half of the year: BNP Paribas
- Swedish inflation rises in survey by TNS Sifo Prospera commissioned by Sweden’s Riksbank
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People George Osborne (United Kingdom of Great Britain and Northern Ireland)
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