Today is D-Day, the day of the Brexit referendum. Yesterday late afternoon there were 2 polls showing that there was a slight majority in favour of a Brexit, which immediately led to some downside in the market. However, a few hours later the latest 2 polls showed exactly the opposite, a small lead for those in favour of remaining in the EU.
Unless the polling is way off (which could be the case) it is expected to be a very close and will likely to depend on voter turnout. Most young people are in favour of remaining part of the EU, but younger people usually are less likely to go out and vote, making the referendum even more interesting. The weather is not great which could also likely influence voter turnout.
The polls have just opened and there will be no exit poll when voting ends in the UK (22:00 local time). It is expected that the first official results will be known only after midnight (00:00) local time and a good indication around 03:00 local time. We are likely to expect a lot of volatility, so make sure your account is ready and well protected.
Currencies
EUR/USD – moved up again after the 2 last polls showed the remain camp in the lead. There were 2 other polls released which showed the opposite and that led to some downside, but as we can see, we are climbing and headed towards the resistance around the 1.1375 level once more. There is some data coming out today, but that all will be a sideshow.
USD/JPY – remains trading close to the resistance and is clearly waiting for the results of the Brexit referendum. If we indeed will get a Brexit, we can expect the JPY to strengthen as a lot of people will be looking for safe havens.
GBP/USD – reached the highest level this year after the last 2 polls released ahead of the actual vote show a small lead for those in favour of remaining in the EU. There is also resistance there, which is still able to hold. We can expect a lot of volatility today and tomorrow here. Some would want to enter positions ahead of the closing of the polls in order to make the most of any move when the results are known, and others are likely to close down their positions in order not to be caught with their pants down if the results are not what they expected. There has been a volatility of over 200 pips a day lately, and this could easily increase today and the following days.
Bitcoin – after moving up during much of the month, since the beginning of this week Bitcoin has seen a drop of over $200. We are able to see some correlation with gold in recent weeks, so we will wait and see for how long this correlation will last.
Indices
Dollar Index – was unable to hold on to the higher levels and is dropping once more and has reached the support area once more.
S&P 500 – has been edging higher in recent days breaking through the resistance around the 2078 level ahead of the Brexit referendum today. As with practically any other instrument, the result of the Brexit referendum will decide on the direction. Up to test the resistance around the 2100 level, or down to test the support around the 2036 and 2030 levels.
Commodities
Corn – is continuing to move further down as the weather is still good for the crop, which means that the supply is expected to increase.
Gold – is waiting for the results of the Brexit referendum and is moving slightly up as the USD is weakening, due to comments from FED Chair Yellen that she is worried about productivity in the US, making a rate hike in the short term even less likely.
Oil – saw a sharp move down yesterday as the inventories showed only a small drawdown while the crude stock of the previous day showed a large drawdown. This thus led to a drop in prices, strengthened by 2 polls showing a lead for the pro Brexit camp. A part of this move down was corrected as the USD weakened and also the last 2 polls ahead of the referendum showed a small majority for those who wish to remain part of the EU.