HALISTER1: INSIDE G-10: Pound Rebounds Ahead of FOMC Amid Brexit Debate

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
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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George Osborne (United Kingdom of Great Britain and Northern Ireland)

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