It wasn’t as quiet as I expected but had a few decent hits – particularly in EUR/USD and AUD/USD – but it was GBP/USD that generated a more substantial move. The downside was expected although I hadn’t anticipated the full monty.
On the whole, with the exception of USD/JPY that mucked about a bit, yesterday’s development was particularly constructive in terms of the outcome I had envisaged. Still, I’m not really expecting any headlong trends at this point. If there is any risk, then it’s the long U.S. weekend that could reduce liquidity slightly. However, I find this unlikely because of the next legs within the individual structures.
Overall, I tend to expect some dollar gains today but not with any particular venom. More likely trading will be sedate and orderly, more steady than a full blown trend. GBP/USD may be an exception after yesterday’s drop and could see some two-way movement.
As expected, the market is probably waiting for more fireworks with the stand-off after the Brexit vote. I’ll only add that in the larger big-picture over a period of maybe 3-8 years it will be EUR/USD that will suffer the most.
The Aussie saw an exceptionally whippy day. It reached its target area on the top but lower than I would have liked. The original target I gave could still be seen but we’ll need to be aware of the risk of another high.
USD/JPY was the pain in the ars… backside. However, this appears to have the potential for a stronger rally. Before that occurs there is a larger risk of a pullback lower. This is playing a fine game with EUR/JPY that has built up a complicated structure. I think it will be EUR/USD that plays a part in this today also. I’d tend to suggest working with the individual pairs rather than the cross.