NZD/USD Fundamental Forecast – June 24, 2016

The NZD/USD gained 19 points to trade at 0.7182 as greenback eased after Janet Yellen’s testimony before US lawmakers.  The US currency has fallen 2.6 per cent this month on expectations that the Fed won't be able to raise interest rates, in contrast with its peers in Europe and Japan, which are carrying out monetary stimulus.
The latest two polls put the 'leave' option, or Brexit, has slightly more support than Britain remaining in the European Union. A TNS survey had 'leave' on 43 percent to 41 percent for 'remain while an Opinion showed 45 percent support for a Brexit and 44 percent for 'remain'. The kiwi edged up to 48.72 British pence from 48.64 pence amid reports some Britons were selling sterling for the euro and other currencies ahead of the vote. The greenback fell after the IMF cut its US growth forecast this year to 2.2 percent from 2.4 percent.
"Seemingly on a trajectory towards 72 US cents, the kiwi is flying again as relatively solid yields and more of a risk-on tone returns to markets," Sharon Zollner, senior economist at ANZ New Zealand, said in a note. "But truly 'anything could happen'; over the next two days. If your business couldn’t handle that, you might want to take cover."
While financial markets have latched onto polls showing the vote is too close to call, bookies in the UK have the odds of remaining in the EU as a clear winner, with odds of just 25 percent for a Brexit when the results are known tomorrow NZ time. A leave vote would unsettle markets, raising the possibility of other defections from the regional economic bloc and potentially undermining the pound and the euro.

EUR/USD Fundamental Forecast – June 24, 2016

The EUR/USD added 23 points as market stress begins to ease as voters in the UK seem to favor a IN vote. The euro is trading at 1.1320 after Janet Yellen’s two days of testimony in which she indicated that there might only be one rate increase these years. On the other hand the IMF’s report questioned the strength of the US economy sending the dollar on a downward slope.
Preliminary data published by Markit showed the Eurozone economy decelerating slightly during June. The Markit Composite PMI index, which combines the manufacturing and services sectors, edged lower to 52.8 from 53.1 in May. This is the worst reading since January 2015. The consensus analyst estimate was 53.1, according to a Thomson Reuters poll.
Continued growth in German business activity, while slowing slightly, was countered by a small decline experienced in France for the first time in four months. The rest of the Eurozone grew at a slightly slower pace than that recorded in Germany.
German Markit data earlier this morning was mixed. The Services PMI fell to 53.2 in June from 55.2 in May.
The primary focus on investors’ minds in the next 24 hours is the outcome of the ‘Brexit’ vote, which is expected to cause a sharp spike in volatility across financial markets, especially those in Europe. The Euro strengthened after the data with EUR/USD at a peak of 1.1340, although moves were driven by UK referendum considerations and cross-related moves. German bund futures dipped lower to stand unchanged on the day.

USD/JPY Fundamental Forecast – June 24, 2016

The USD/JPY is tracking at 104.66 seeing a slight gain today even though the US dollar fell in the session. As safe haven traders lighten the yen continued to eased as the vote begins in the UK. Two days of testimony from Janet Yellen had little effect on the global markets. Prime Minister Shinzo Abe’s Liberal Democratic Party and junior partner Komeito aim not just to maintain their majority in the chamber, but to together win at least half of the contested seats, which would be taken as signifying voters’ continued faith in Abe.
The prime minister recently postponed for a second time a planned increase in the national sales tax because of the economy’s fragility, a move some speculate was politically driven.
Speaking in Kumamoto Prefecture, which is still recovering from April’s destructive earthquakes, Abe called the economy “this election’s biggest theme.”
The dollar was broadly weaker on Wednesday as risk appetite returned to markets, boosting higher-risk currencies, while sterling and the euro rose on the last day of campaigning before Britain's referendum on European Union membership.
A swing in bookmaker odds toward Britain choosing to remain in the EU, following the murder of a British lawmaker last week, helped boost currencies like the Australian and New Zealand dollars, considered riskier investments because of their ties to commodity prices.

EUR/GBP Fundamental Forecast – June 24, 2016

The EUR/GBP is down 15 points at 0.7661 as both currencies gains but the pound outpaced the euro as the possibility of a LEAVE vote lessed as the polls opened. Euro-area consumer confidence weakened slightly to -7.3 for June from the four-month peak of -7.0 previously and very close to the expected reading for the month.
Given a slightly strange methodology, the index also remains significantly above the long-term average of -12, primarily reflecting the extremely weak numbers seen during the 2008 financial crash when the index dipped to lows near -35.
In recent weeks, worries that a British exit from the EU will stoke global economic uncertainty has roiled financial markets, spurring wild swings in the pound, euro and other currencies and pushing banks to warn of more volatility to come.
That has prompted banks to caution clients against taking large positions in a market where currencies could gyrate and liquidity may dry up. Those nerves have extended to the high street, where currency-exchange and money-transfer services proliferate given a large foreign-born population and the British love of holidays abroad.

EUR/JPY Fundamental Forecast – June 24, 2016

The EUR/JPY added 75 points to reach 118.72 as the euro rallied and the yen eased as global stress lessened with the UK vote today. The race, which kicked off Wednesday, could pave the way for Prime Minister Shinzo Abe to make history: to revise the U.S.-drafted Constitution nationalists see as a humiliating remnant of Japan’s World War II defeat. Since its inception nearly 70 years ago, the national charter has not been tweaked once.
The latest poll, released on Saturday, eased excessive risk aversion among investors about a possible British exit from the EU, or Brexit, market sources said.
The pound soared above ¥152.50 on Monday from levels below ¥150 on Friday.
The pound’s strength in turn prompted buying of the dollar against the yen, traders said. The U.S. currency also attracted regular purchases by Japanese importers while drawing support from higher Japanese share prices, they said.
The British survey was the first conducted after British lawmaker Jo Cox, who had been campaigning for her country to remain in the EU, was killed last Thursday. Markets have been particularly volatile in the week leading up to Britain's EU vote Thursday. While bookmakers say there is an 80 percent chance Britain will stick with the EU, opinion polls predict a dead heat, with about 10 percent of voters yet to decide which way to go.
"A UK vote to exit the European Union could have significant economic repercussions," Yellen warned in a testimony to the Senate Banking Committee.

USD/CAD Fundamental Forecast – June 24, 2016

The USD/CAD dipped 61 points as the CAD gathered its legs on rising oil price and lower risk off trading. The US dollar has been tumbling as safe haven demands eased. Oil prices soared to the $50 level while gold is trading steady. The CAD is trading at 1.2782. US Existing Home Sales rose for a third consecutive month, increasing 1.8% in May. Fed Chair Janet Yellen is in her second day of testifying before Congress. Little volatility in financial markets has been created by the Chairwoman’s testimony.
The Canadian dollar got a boost from British polls pointing to a rise of the Stay camp. Over the weekend the sentiment has started to shift after the tragic shooting of pro-Stay MP Jo Cox. The USD had appreciated as investors were looking for a safe haven after fearing uncertainty on the Brexit referendum outcome.
The three biggest factors guiding the fate of the loonie are: The Fed, the Brexit referendum and the price of oil. Brexit fears triggered risk aversion and probably made the Fed opt out of hiking rates in June. The flight to safety flows turned into a USD rally putting further downward pressure on oil prices giving little support for the CAD.

GBP/USD Fundamental Forecast – June 24, 2016

The GBP/USD continues to gain today as the Polls opened for voting and the last surveys strongly favored a REMAIN. The pound is at a 2016 high of 1.4781. Sterling climbed almost 1 per cent to $1.4844, its strongest level of a testing 2016, before giving up some of those gains as the foreign-exchange market opened in London to trade at $1.4754.
Investors’ anxiety that the UK may vote to leave the EU has shown up most clearly in sterling, which hit a low for the year of just above $1.38 in late February when the date for the referendum was announced.
It has rallied almost 4 per cent against the dollar over the last five days on signs that the Remain camp has regained some momentum.
Moneycorp, a U.K. foreign-exchange provider, says it will switch off its online operation on Thursday evening and bring it back sometime Friday, the company said. “Nobody knows what the result will be, so we have to be prepared either way,” said Mark Horgan, its chief executive.
The firm has been working with banks since February to ensure it has enough liquidity around the referendum to back up its transfers. “We don’t want to gamble with people’s hard-earned money,” said Michael Kent, its chief executive.
With the potential for a selloff in sterling, some Britons have been stocking up on foreign exchange in recent weeks. That is in part ahead of the summer holiday season. The Post Office said currency sales at its branches on Tuesday was up nearly 50% compared with last year and were up 381% online.

AUD/USD Fundamental Forecast – June 24, 2016

The AUD/USD soared 26 points to trade at 0.7522 as global stress eased ahead of the UK referendum vote today. The UK is almost certainly not going to vote to leave the European Union. The so-called “Brexit” outcome has been scuttled.
That’s clearly the view being expressed by Australian dollar traders early on Thursday morning with the AUD/USD now sitting comfortably above the 75 cent level, having traded as high as .7527 in overnight trade. (BusinessInsider)
Thin market conditions, largely as a result of large investors sitting on the sidelines before the referendum results are known, is also contributing the outsized moves being seen in the Aussie and other risk assets.
The US currency fell versus all its major peers as Fed Chair Janet Yellen's comments in her congressional testimony reiterated a cautious and uncertain view of the economy. It weakened against the euro and pound as traders took cues from betting odds that point to the UK voting to stay in the EU.

GBP/USD Forecast June 23, 2016, Technical Analysis

The GBP/USD pair initially tried to rally during the day on Wednesday but struggled again at the 1.48 level. It is obvious that the 1.48 level has become a significant resistance barrier and if price can break above this level the pair will continue go higher. On the other hand, GBP/USD break down below the bottom of the shooting star from both Tuesday and Wednesday, the market could very well fall to fill the gap that formed at the beginning of the week.
Obviously, there are a lot of moving pieces at this point in time, as the United Kingdom is currently voting as to whether or not to stay in the European Union today. While we will not get the answers until tomorrow, the reality is that there will be exit polls and rumors coming out during the today's session which will move the British pound in general. This is going to be a very volatile market and quite frankly could be choppy for many  traders. Because of this, you will have to be very careful about position sizing and perhaps could even benefit from trading options as opposed to spot Forex market positions.
If the pair do fall, the gap could get filled which all the way down to the 1.4350 handle. Obviously, markets will be heavily influenced by the outcome of the vote so having said that this could be a turning point for the British pound over the course of the next several months. Ultimately, there will be a knee-jerk reaction regardless of what the outcome is so longer-term traders will be waiting to see a longer-term opportunity. The volatility could be extraordinary over the next couple of sessions and one would have to believe that the British pound would strengthen if they stay within the European Union. On the other hand, if they choose to leave the EU, the British pound will more than likely get sell off. At that point, I believe that longer-term will find value in the British pound but the volatility in the downward pressure could last for a wild.

EUR/GBP Forecast June 23, 2016, Technical Analysis

The EUR/GBP pair bounce slightly during the day on Wednesday, as it appears that participants are simply waiting to see whether or not the UK remains or leaves the EU. This is essentially going to be “Ground Zero” when it comes to that vote, so this is a market that I would be very hesitant to place money into. Every rumor, exit poll, and whisper on the news channels will probably move this pair, so having said that you will have to trade it with extreme caution. For us, we think it’s easier to simply trade other currency pairs today.

EUR/JPY Forecast June 23, 2016, Technical Analysis

The EUR/JPY pair initially rallied during the day on Wednesday, but pulled back slightly before the date closed. Quite frankly, with the EU referendum vote coming out of the United Kingdom today, headlines will continue to push the market back and forth. This of course will have a great influence on the Euro, so it’s likely that this pair will continue to see selling back and forth as the market could drop a little bit as we await the final verdict. We won’t get that until tomorrow, so expect choppy conditions but it won’t take much to scare the market.

AUD/USD Forecast June 23, 2016, Technical Analysis

The AUD/USD pair rose during the course of the session on Wednesday, breaking out to a fresh, new high. However, we are still fighting more of a grind than anything else. Ultimately, this is the market to watch as it is avoiding both the European and British currencies, and could give us an idea of what the risk appetite will be around the world. Also, you have to keep in mind that gold is highly influential on what’s going on with the Australian dollar, so we could get a bit of a boost from the gold market showing bullish pressure.

EUR/USD Forecast June 23, 2016, Technical Analysis

The EUR/USD pair rallied during the day on Wednesday, taking out quite a bit of the losses from Tuesday. This is a market that’s going to be very volatile day due to the EU referendum being voted on in the British Isles. Because of this, I am actually standing away from this market and not touching it under any circumstances. Headlines and rumors as well as exit polls will move this market drastically today but we won’t get the actual official vote count until tomorrow. Today it’s going to be very dangerous to trade this particular pair.

GBP/JPY Forecast June 23, 2016, Technical Analysis

The GBP/JPY pair went back and forth during the day on Wednesday, showing quite a bit of volatility in it appears that the market is going to continue to be very jittery as we await the results of the EU referendum vote coming out of the United Kingdom. With this, the GBP/USD pair would be very volatile as it is very volatile naturally. I think if we can break above the top of the range for the day we could very well reach towards the 158 level, but if we break down below the bottom of the same range, we could drop all the way down to the 150 level. Regardless, expect headlines and exit polls to move this pair.

USD/JPY Forecast June 23, 2016, Technical Analysis

The USD/JPY pair fell during the day on Wednesday, testing the 105 level for resistance. That being the case, the market looks as if it is trying to continue to consolidate between the 103 level on the bottom and the 105 level on the top. Makes quite a bit of sense though, as we await what is without a doubt going to be a very market moving event coming out of the United Kingdom as they vote on whether or not they are going to be involved in the European Union anymore.