It’s all about one thing and one thing only this week: BREXIT! The world’s global markets are hanging on Thursdays EU referendum vote decision, with results published on Friday. Expect this week and the weeks ahead to be turbulent and volatile, off the back of any voting surprises.
US Stock Indices failed to push through record highs and gave back some of their recent gains. This mild bearishness looks set to continue into the week. In the UK the FTSE 100 remains in a ‘death cross’ technical situation and is now off 15% from April 2015 highs. If the market perceives any EU referendum decision as negative, we could see the FTSE drop quite significantly. In the Far East the Hang Seng and Nikkei 225 are trading into tightening ranges and look to continue that pattern in the short term.
The same theme prevails across the majors: A very strong JPY, a weak GBP and a USD that doesn’t really know where it is going. In Emerging Markets, the MXN and MYR continued their weakness against the USD, whilst SGD looks to be making further gains.
Gold is going to be the interesting commodity to watch this week. It is a safe haven asset, so if the UK votes to leave the EU, you could see gold soar, or conversely fall, if they decide to stay. In other commodities WTI oil is back playing around the $48 / $50 resistance zone. The softs complex, especially Sugar and Cotton, has been particularly bullish and could remain that way for a while, due to strong fund buying, a lack of supply and poor growing conditions.
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Author Stephen Hoad, BA Hons, MSc, MSTA is a full time trader, technical analyst and one of the UK’s leading trader trainers. He currently lectures for the Society of Technical Analysts.