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EUR in consolidation mode again

 

 

 

FXStreet (Łódź) - Independent Analyst Vladimir Mihaylov observes that the euro remains under pressure ahead of the release of EU ZEW data and the Fed monetary policy decision tomorrow. 

 

Key quotes

 

"Possible support that will stop the downside is 1.2600 and the final one is around 1.2300 but I doubt we shall reach there soon."

 

"There was a large amount of unexpected bad EUR news and it seems the things over the Atlantic are getting a lot better."

 

"It is expected the FED to make another stimulus cut from 25 bln to 15 bln. This will push the EUR even lower till the end of this week."

 

"Today is expected the Gernamy's ZEW to be a lot worse too."

 

 

 

 

 

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Sep 16, 2014

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EUR/USD remains heavy ahead of FOMC – OCBC Bank

 

 

 

FXStreet (Edinburgh) - According to Emmanuel Ng, FX Strategist at OCBC Bank, the pair will keep the heavy tone as we get closer to key events, such as the FOMC meeting and the TLTRO take up.

 

Key Quotes

 

“The EUR-USD may continue to loiter amidst a top heavy tone with the OECD yesterday urging further action from the ECB”.

 

“Data points meanwhile are providing no relief, with the July trade surplus shrinking from the previous month at EUR12.2bn”.

 

“As noted yesterday, the pair may be expected to bounce within a 1.2900-1.3000 range pending further cues (i.e., FOMC on Wednesday and the TLTRO take up on Thursday)”.

 

 

 

 

 

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Sep 16, 2014

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GBP/USD offered below 1.6300 – UOB Group

 

 

 

FXStreet (Edinburgh) - The sterling will remain under selling pressure as long as the market keeps trading below the 1.6300 mark, suggested Quek Ser Leang, Market Strategist at UOB Group.

 

Key Quotes

 

“The short-term upward momentum continues to deteriorate and further GBP strength is unlikely from here”.

 

“However, another attempt towards yesterday’s high of 1.6275/80 will not be surprising but as long as the major resistant at 1.6300 is not taken out, this could lead to a deeper pull-back towards 1.6200/05.

 

 

 

 

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Sep 16, 2014

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United States Producer Price Index (MoM) meets forecasts (0%) in August

 

 

 

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Sep 16, 2014

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Ruble hit by sanction woes while Ukraine grants eastern regions special status

 

 

 

FXStreet (Łódź) - The Russian ruble fell to a record low of 38.5175 against the dollar on Tuesday on fears that sanctions would cause lasting damage to the Russian economy. 

 

Alexei Kudrin, a former finance minister under Putin, said during a business conference that West's sanctions "are going to have an effect (on the economy) for the next one or two years because they have limited opportunities for investment in this uncertain environment." 

 

Investor confidence was further undermined by reports that Moscow is planning to strike back by introducing import bans, which could damage domestic consumer spending.

 

Meanwhile, the Ukrainian parliament passed a law in line with the ceasefire agreement, granting special self-rule status to the eastern regions of the country overrun by pro-Russian separatists. 

 

The new bill legislates Russian as the second official language, establishes a special economic rule in the region, sets the early local elections date for December 7 and offers amnesty to the militia members.

 

Still, the leaders of the rebels stated that they are not interested in enjoying a special status, and demanded full independence from Ukraine. The fighting, which continues in Donetsk, as well as the presence of about 25,000 Russian soldiers close to the Ukrainian border, highlights the fragility of the truce.

 

 

 

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Sep 16, 2014

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USD/JPY faces the 107.00 frontier

 

 

 

FXStreet (San Francisco) - It seems the 107.30 area is providing more problems that initially thought for the USD/JPY as the pair hasn't been able to break above it despite several attempts. 

 

The last try was in the European morning with a daily high of 107.30 but the pair was rejected to test the 107.00 area where it remains pricing in sideways mode.

 

Currently, USD/JPY is trading at 107.12, down 0.06% on the day, having posted a daily high at 107.35 and low at 106.93. USD/JPY spot is in neutral territory according to the hourly FXStreet OB/OS Index, while the FXStreet Trend Index is slightly bullish. 

 

USD/JPY levels

 

If the pair manages to hold the 107.00 level, it will face next resistances at 107.30, 107.40 and 107.80. On the downside, supports are at the mentioned 107.00, then 106.90 and 106.60.

 

 

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Sep 16, 2014

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AUD/USD advances within range - FXStreet

 

 

 

FXStreet (Łódź) - FXStreet Chief Analyst Valeria Bednarik notes that after setting the daily high of 0.9052 at the beginning of the Asian session, and a low of 0.8988 in early Europe, AUD/USD is now rising within range. 

 

Key quotes

 

"The 1 hour chart shows price a few pips above a flat 20 SMA and momentum around 100, showing no actual strength."

 

"In the 4 hours chart indicators correct from oversold levels yet remain in negative territory, while 20 SMA maintains a strong bearish slope above current price, which helps keep the upside limited."

 

 

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Sep 16, 2014

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USD/CAD completes the 1.1000 trip, but it holds

 

 

FXStreet (San Francisco) - The USD/CAD fell around 70 pips from 1.1070 in the latest few hours to test the 1.1000 level where the pair found buying interest that launched the pair back to 1.1020.

 

CAD gained strength after Canadian Shipments published better than expected numbers in July, expanding at a monthly pace of 2.5% vs. 1.0% forecasted and up from June’s 0.9% gain.

 

Currently, USD/CAD is trading at 1.1022, down 0.29% on the day, having posted a daily high at 1.1073 and low at 1.0998. The FXStreet OB/OS Index is reflecting neutral hourly conditions, while the FXStreet Trend Index is slightly bearish.

 

USD/CAD levels

 

If the pair holds above the 1.1000, it will next resistances at 1.1035 and 1.1070. On the upside, supports are at 1.1000, 1.0970 and 1.0930.

 

 

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Sep 16, 2014

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EUR/USD recovers its quietness and trades at 1.2935

 

 

FXStreet (San Francisco) - After a brief decline to 1.2920 and a shy test of MA 200 hours at 1.2965, the EUR/USD is now trading quietness around 1.2940. 

 

Investors are focused on Wednesday's FOMC. As Valeria Bednarik from FXStreet comments: "If something, FED meeting on Wednesday can be the trigger market is waiting for to decide whether to resume the trend or begin a recovery." 

 

Currently, EUR/USD is trading at 1.2941, up 0.01% on the day, having posted a daily high at 1.2967 and low at 1.2922. EUR/USD spot is in neutral territory according to the hourly FXStreet OB/OS Index, while the FXStreet Trend Index is slightly bullish. 

 

EUR/USD levels

 

If the pair manages to break below 1.2940, it will face supports at 1.2920 and 1.2905. On the upside, resistances are at 1.2950, 1.2965 and 1.2980.

 

 

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Sep 16, 2014

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EUR/JPY continues to play on inflation expectations

 

 

FXStreet (London) - EUR/JPY is currently trading at JPY138.7185 after hitting two-month highs above JPY139.2 on Friday.

 

The recent euro gains have broken a six-month down trend in the pair on diverging inflation expectations.

On Thursday the European Central Bank will roll out the first round of its targeted long-term refinancing operations (TLTRO) with an auction allowing banks access to cheap four-year loans. With Eurozone inflation numbers set to be released tomorrow, and despite the drastic measures being put in place by the ECB, there remains doubt that the central bank can achieve its 2 percent inflation target. After having gone through a period of deleveraging, the six planned TLTROs in conjunction with the ECB's purchase of asset-backed securities are expected to take the size of the ECB's balance sheet back to 2012 levels at around EUR3 trillion.

 

Japan inflation "on target" - Kuroda

 

While the statement contains an element of jawboning, speaking at an event in Osaka overnight, Bank of Japan governor Haruhiko Kuroda said that he expects Japan to reach its inflation target after aggressive monetary policy. “The year-on-year rate of increase in the CPI, which is likely to be around 1.25 percent for some time, is expected to subsequently follow an uptrend again from the second half of this fiscal year and reach about 2 percent around the middle of the current projection period from fiscal 2014 through 2016” said the central bank governor.

 

The pair is currently trading at JPY138.7185, just over its opening of JPY138.6930 after a choppy day of trading.

 

 

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Sep 16, 2014

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Gold fails to hold above $1,240

 

 

FXStreet (Córdoba) - Gold rose during the European session to $1,242 reaching the highest price since last Thursday but failed to hold above $1,240 and lost $10 in the last hours. 

 

After Wall Street opening bell price accelerated the retreat from the highs and bottomed at $1,231.50, around the area of yesterday’s American session lows. The value of the ounce remains near the lows around $1,233; at the same level it had at the beginning of the day. 

 

XAU/USD technical outlook 

 

Spot gold continues to move with a bearish bias but in the short term is giving some signs of stabilization. Today’s rejection from above $1,240 could suggest that is still not ready for a major recovery.

 

 

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Sep 16, 2014

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Scottish independence referendum remains a close call – Danske Bank

 

 

FXStreet (Edinburgh) - According to different opinion polls, the outcome from tomorrow’s Scottish referendum is yet far from decided, commented Anders Fischer, Analyst at Danske Bank.

 

Key Quotes

“Yesterday’s three polls (from Daily Telegraph, Survation and Scotsman) all put support for remaining in the UK at 52% with 48% backing independence, when undecided voters are excluded – and all suggested that support for a Yes vote was rising”.

 

“However, the three polls gave differing estimates for the proportion of voters still undecided, ranging from 14% to 6%”.

 

 

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Sep 17, 2014

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United States Consumer Price Index (MoM) came in at -0.2% below forecasts (0%) in August

 

 

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Sep 17, 2014

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US: CPI (Aug) rose 1.7% (YoY)

 

 

FXStreet (Edinburgh) - The Department of Labour informed that US inflation figures measured by the CPI rose at an annual pace of 1.7% in August, missing estimates for a 1.9% gain. On a monthly basis, prices dropped 0.2%. Core CPI, which strips food and energy costs, rose 1.7% over the last twelve months and 0.0% inter-month.

 

 

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Sep 17, 2014

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USD/JPY falls on weak US inflation

 

 

FXStreet (San Francisco) - The US reported its first negative monthly CPI since October 2013 and a weaker than expected yearly inflation in August that put the USD under pressure as it hints more problems for the Fed in case they are thinking to hike rates.

 

The US is back on negative inflation in August with -0.2% MoM. First negative reading since October 2013. In the same line, yearly inflation was reported weaker than expected with 1.7% YoY, down from previous month of 1.9%. It is not a good news for those rate hike believers.

 

The USD/JPY fell to 107.10 after a 25-pip decline from 107.35 following US data. Currently, USD/JPY is trading at 107.19, up 0.06% on the day, having posted a daily high at 107.37 and low at 107.09.

 

USD/JPY spot is in neutral territory according to the hourly FXStreet OB/OS Index, while the FXStreet Trend Index is slightly bullish. 

 

USD/JPY levels

 

Weak CPI data fueled a renewed dip within recent ranges for the greenback. According to Gerry Davies from FXBeat, there are options expiries at today's New York cut at 106.75 ($300 mln), 107.00 ($100 mln) and 107.25 ($200 mln).

 

If the pair extends negative figures, it will face next support at 107.00 and 106.80. On the upside, next frontiers are at 107.35, 107.40 and 107.60.

 

 

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Sep 17, 2014

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EUR/USD jumps after US inflation data

 

 

FXStreet (Córdoba) - EUR/USD pushed to fresh daily highs at the beginning of the American session after data showed US consumer prices grew less than expected in August.

 

The greenback weakened across the board and EUR/USD surged to fresh highs as both the core and the headline US CPI came in at 1.7% year-over-year in August versus 1.9% expected. The CPI fell 0.2% MoM (0.0% exp) while the core was flat (vs +0.2% exp).

 

EUR/USD jumped 25 pips on the news and hit a peak of 1.2980 but lacked follow-through as investors seem unwilling to take big positions ahead of the Federal Reserve monetary policy statement. Markets are expecting a hawkish shift in Fed stance, so any change in forward guidance might increase the appeal of the US dollar.

EUR/USD technical levels

 

At time of writing, EUR/USD is trading at 1.2970, 0.09% above its opening price, with immediate resistances lining up at the 1.2994/1.3000 zone (Sept 16 high/psychological level), 1.3059 (21-day SMA) and 1.3100 (psychological level). On the flip side, supports are seen at 1.2939 (10-day SMA), 1.2908 (Sept 15 & 12 low) and 1.2900 (psychological level).

 

 

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Sep 17, 2014

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USD/JPY at 110.00 in medium-term – Rabobank

 

 

FXStreet (Edinburgh) - According to Jane Foley, Senior Currency Strategist at Rabobank, the pair could reach 110.00 in the medium-term.

 

Key Quotes

 

“One year Japanese government yields reportedly traded at a yield of -0.005% this morning, the first time 12 mth paper has sunk below the zero mark”.

 

“The drop in yields to below zero is a function of the huge demand for government assets from the BoJ to meet to needs of its huge stimulus plan”.

 

“There is no question that the easing measures that the BoJ has put in place are very aggressive. It is very likely that without them Japan’s economic woes would be deeper than they already are”.

 

“In general recent data releases have been weak. This suggests that the economy is failing to bounce back as well as hoped in the current quarter after the Q2 economic contraction that followed the hike in the consumption tax in April”.

 

“Even though it is clear that QE is no silver bullet, in view of limited alternatives available, there is speculation in the market that the BoJ will be forced to increase its easing measures even further in the coming months; though it may have to become increasingly inventive”.

 

“Into the summer months BoJ optimism had repressed talk of a step up in policy action so this change in expectations has had some impact on yen positions”.

 

“That said, we have argued for some time that the outlook for the USD is key for the direction of USD/JPY and that further upside will be facilitated by a recovery in the greenback”.

 

“While we expect that the USD faces set backs from here, not least because we do not expect a rate hike from the Fed until the end of 2015, we do view the USD as having embarked on a long-term recovery”.

 

“We maintain a medium-term target for USD/JPY at 110.00”.

 

 

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Sep 17, 2014

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US CPI for August significantly weaker than expected - ING

 

 

FXStreet (Łódź) - Rob Carnell from ING points out that US August CPI disappointed, sliding to 1.7% from 2% on an annual basis, below forecasts of 1.9%. 

 

Key quotes

 

"Whilst we had expected the core index to nose higher, it was flat, which also resulted in core inflation dipping down again to 1.7% from 1.9%."

 

"The large fall in energy prices in August (-2.6%mom) was somewhat larger than expected, and was exacerbated by a flat service sector reading (0.0%), softer than trend housing (0.1%), negative apparel (-0.2%), flat medical care, negative recreation(-0.4%) negative education (-0.1%) and softer than usual 'other goods and services,' including tobacco, which was also flat on the month."

 

"Such uniform declines across CPI subcomponents are rare, and in our experience, usually owe to a common factor, such as poor seasonal adjustment, in the absence of an obvious external cause."

 

"This weakness does also look rather odd against the backdrop of recently strong retail sales, and anecdotes of rising pricing intentions."

 

"That said, low and falling energy costs may be helping to offset other cost pressures, resulting in a broader decline than evident simply in the energy subcomponents, so we can’t entirely write it off."

 

"It is also great timing for such a soft CPI reading, with the FOMC decision later today, and markets anticipating at least some small change in the Fed’s rhetoric."

 

"We suspect that any such changes will be small, most likely, a tweak to the text referring to the time after QE ends before the first rate hike. Perhaps a replacement of the word 'considerable', in this context."

 

"Whilst we believed that markets had been anticipating too much in the way of change at this meeting, this release is likely to temper enthusiasm for a bigger adjustment, and if we are right, then markets are likely to take a minimally changed FOMC text in their stride later on."

 

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Sep 17, 2014

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OPEC Secretary General sees low price of oil as temporary

 

 

FXStreet (Łódź) - Independent Analyst Malcolm Graham-Wood reports that OPEC Secretary General's suggestion during his meeting with the Russian Oil Minister on Tuesday that the current low price of oil is temporary, caused Brent to jump by over two dollars to $96.63.

Key quotes

 

"He also suggested that at the next Opec meeting quotas may have to come down from the current level of 30m b/d to around 29.5m b/d."

 

"The trouble is that whilst all member of Opec want higher prices few are prepared to cut their own production and even if they do agree to pare back they usually cheat."

 

"I mean, current quotas are being exceeded by at least 500/- b/d before Saudi Aramco cut back recently. At least it shows that Opec are at least looking at the supply and demand numbers for next year."

 

"The API inventory stats had the analysts in a right pickle, having forecasted a draw of 1.5m barrels, stocks unexpectedly rose by 3.3m barrels."

 

"I will hold judgement until the EIA numbers tonight to look at both crude and products as September can throw up some funnies across the board."

 

"The statements from the Fed tonight will be interesting, markets are expecting further cuts in QE and to see if Janet Yellen will give a steer on interest rates, for oil watchers we need to see if the modest pick-up in the economy is coming through."

 

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Sep 17, 2014

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AUD/USD mired around 0.8970

 

FXStreet (Edinburgh) - The Aussie dollar remains unable to gather further traction on Thursday, with the AUD/USD hovering over 0.8970/80.

 

AUD/USD in multi-month lows

 

The current USD rally is confining the pair to trade in levels last seen in late February/early March, as markets continue to digest yesterday’s FOMC announcements. Nothing of note in Oz in the data front, only showing that RBA’s FX transactions hit A$381 million in August, down from July’s A$433 million. Quek Ser Leang, Market Strategist at UOB Group, signaled “AUD touched a low of 0.8939 early this morning and with no signs of stabilization yet, expect further down-move towards the next support at 0.8915/20. Strong resistance is at 0.9000”.

 

AUD/USD relevant levels

 

As of writing the pair is advancing 0.09% at 0.8969 with the immediate resistance at 0.9000 (psychological mark) ahead of 0.9106 (high Sep.17) and then 0.9113 (high Sep.16). On the downside, a break below 0.8951 (low Sep.17) would expose 0.8923 (low Mar.12) and finally 0.8909 (low Mar.4).

 

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Sep 18, 2014

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US: Housing Starts down to 0.956M in August

 

FXStreet (Łódź) - US Housing Starts were at 0.956M in August, down from 1.117M recorded in July, the US Census Bureau informed on Thursday. Consensus pointed to 1.040M.

 

Building Permits slid to 0.998M from 1.052M, below forecasts of 1.045M.

 

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Sep 18, 2014

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Fed's Yellen: US economy improving but recession effects still evident

 

FXStreet (Łódź) - Speaking at an economic conference in Washington on Thursday, Fed chair Janet Yellen avoided the topic of monetary policy when delivering her prepared remarks. 

 

• US economy seen improving, although recession effects persist.

 

• "Fed will continue promoting asset building, the US needs a greater diversification of assets.

 

• Lower-income households suffered most during the crisis, Yellen points out. 

 

• Improving housing market will remain crucial for family assets.

 

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Sep 18, 2014

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USD/JPY extends gains to 109.00

 

 

 

FXStreet (San Francisco) - The US Dollar is extending its gains versus the Japanese Yen following better than expected jobless claims in the United States. The pair is performing fresh highs around 109.00.

 

Earlier in the day, the USD/JPY climbed to 108.85 where the pair found selling interest that launched it back to 108.50. Then the pair resumed its uptrend again and now it is pricing a news highs since September 2008 at 108.96. 

 

Currently, USD/JPY is trading at 108.82, up 0.41% on the day, having posted a daily high at 108.97 and low at 108.31. The hourly FXStreet OB/OS Index is showing neutral conditions, alongside the FXStreet Trend Index which is slightly bullish.

 

USD/JPY levels

 

If the pair manages to break above the 109.00, it will face next resistances at 10920 and 109.60. On the downside, supports are at 108.50, 108.30 and 108.70.

 

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Sep 18, 2014

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GBP/USD hits 2-week highs as 'no' vote is priced in

 

 

 

FXStreet (Córdoba) - GBP/USD rose to its highest level in 2 weeks as markets are pricing in a 'no' in Scotland independence referendum.

 

As Scottish referendum unravels, investors rush to buy the pound as pre-voting opinion polls gave a slight lead to those in favor of remaining in the United Kingdom. The Scottish vote ends at 21:00 GMT but the unofficial estimated time of the result is around 7:00 GMT on Friday. First results are expected around 01:00 GMT.

 

GBP/USD rose more than half a cent within the last hour and reached a fresh 2-week high of 1.6386 in recent dealings. At time of writing, Cable is trading at 1.6373, exactly 100 pips or 0.59% above its opening price. 

 

GBP/USD technical levels

 

In terms of technical levels, GBP/USD could find next resistances 1.6386 (intraday high), 1.6400 (psychological level) and 1.6465 (Sept 4 high). On the flip side, supports are seen at 1.6240 (10-day SMA), 1.6200 (psychological level) and 1.6161 (Sept 16 low).

 

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Sep 18, 2014

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The Scottish Referendum: views from RBS, BBH FXpro and MSCI

 

 

 

FXStreet (London) - With Scotland currently going to the polls to decide the future of the Union, here is our roundup of market views on the outcome and the market implications.

 

Brown Brothers Harriman

 

Marc Chandler, Global Head of Currency Strategy

 

The Scotland vote today is the main event, and as important as a "yes" vote would be, it is not the only event today. There is not much more to add to the discussion. While the polls remain a statistical dead heat, the wisdom of crowds work implies giving more weight to the bookmakers and the markets, which clearly favor a "no" victory. There is some genuine concern that Scottish referendums will be a recurring theme (see Quebec) on a small victory for the unionists. Such fears, coupled with the fact that some have already positioned for such an outcome may, may curtail the positive sterling response to the a "no" vote.

 

RBS

 

Trading Desk Strategy

 

The GBP was relatively stable against the USD and stronger against the EUR and JPY ahead of the Scottish independence vote with one-week GBP implied volatility trading just under 14.9%, compared to an historical three-month volatility of 4.8%. However, this has eased somewhat from yesterday when it was around 17.4%. This suggests that the market is a little more confident of a No outcome, consistent with the latest polls that slightly favour a No outcome, stabilising over the final week ahead of the vote after the No-vote lead narrowed sharply in recent weeks. 

 

The market is pricing in considerably higher downside volatility risk for GBP with the price of GBP puts exceeding the price of calls (25delta 1week risk reversals) by 4.4%

 

A Yes vote would be a significant surprise and may rattle global risk appetite with negative consequences for Emerging currencies. It may also trigger profit-taking in long positions in USD against EUR and JPY, even though the implications may be more negative for the EUR. A No vote may be moderately supportive for GBP and broader risk appetite.

 

MSCI

 

ESG Research

 

If Scotland votes for independence, it could have long run implications on the environmental, social, and governance risks facing both the UK and Scotland. At present, UK's ESG Government Rating is 'A' with a Stable outlook. In general, a vote for independence by Scotland does not promise to bear overall positive fruit for either the UK or Scotland from an ESG perspective. If Scotland votes for independence, it is bound to result in downward pressure on the ESG score for both the UK and Scotland.

 

Over 90% of the UK's oil and gas reserves are located in Scotland, and a vote for independence would lead to the transfer of a large portion of reserves to the newly formed country.1 While the territorial proportion of oil revenues from the North Sea between Scotland and the UK has not yet been finalized, what is largely assumed is that Scotland walks away with a major share. 

 

While Scotland tends to win big on natural resources, its wins could be dwarfed by its weaker performance on important socio-economic parameters. Firms are wary of how an independent Scotland will manage its industries as it struggles to adjust to its new identity. If Scots vote for independence, a considerable number of companies have stated their intention to re-locate from Scotland to England. Further, Scotland has an ageing population, with close to 17.4% of its population over the age of 65 years. 

 

With independence, the buck would pass on to Scotland to bear the associated social expenditure. Expenditure on social services provided to Scotland by the UK is already higher than in the rest of the country (public spending at GBP 12,629 per person compared to GBP 11,381), and expected to rise if Scotland secedes.4 Additionally, if the vote for independence goes through, Scotland is likely to witness a large flight of its intellectual capital, which is expected to migrate to the UK on the prospects of securing professional opportunities. Labor supply in the UK ex Scotland is projected to increase by 12% by 2060, as opposed to in Scotland, where it will remain flat.

FXpro

 

Angus Campbell, Senior Analyst

 

So, how will sterling react in the event of a Yes or No vote? Forecasting FX rates are notoriously difficult however we have put together some thoughts below:

 

YES VOTE

 

A yes vote will cause an immediate sell off in sterling as it has not been fully priced into the market. We saw GBPUSD fall 4 cents following the You Gov poll some ten days ago that showed the Yes Campaign in the lead for the first time ever, a 2.5% fall, but if the vote for independence succeeds then a much bigger sterling sell off can be expected possibly in the region of 5% taking GBPUSD well below the 1.6000 level where it would likely stay and fail to recoup over the medium, even longer term, as the dollar continues to recover.

Against the euro sterling could suffer less of a dramatic fall due to the ECB’s continued loosening of monetary policy and should recoup losses into the year end as central bank policy reaffirms the divergence between the BOE and ECB, even if rate hike expectations from the BOE are pushed back as a result of the yes vote.

 

NO VOTE

 

This result would be a boon for the British pound which should see a strong relief rally in the short term as all the worries over how assets and liabilities will be split are swept firmly under the carpet. I say “swept” because the issue is highly likely to resurface at some point in the future, especially if the Scottish National Party maintains its grip on power in Holyrood.

 

Sterling’s strength however may not last all that long as the existing trend re-establishes itself. The dollar recovery looks to be becoming entrenched and so any bounce in GBPUSD could be largely eradicated come year end.

The one thing that we can expect for sure is that with such a close race volatility overnight on Thursday and throughout Friday is going to be high. My personal opinion is that the No Campaign will win on the day – it’s one thing saying you’ll vote for independence, it’s another when you are standing in the polling booth and actually casting your vote, when often a voter reflects on the significance of such a decision and is more likely to stick with the status quo.

 

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Sep 18, 2014

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