The historic events of Friday have driven the global market into a rough patch. The British pound, is sliding back toward the lows of Friday, early in today’s trading session. This comes after the Pound had recovered slightly from the 31-year low of 1.32217 against the USD, hit on Friday. This reflects the deeply bearish mood among investors regarding Britain’s vote to leave the EU.
The euro has also been burdened by the Brexit, opening this week with a pretty big gap down versus the US dollar. The market is currently trading around the reading of 1.10080, 1125 points lower than the close price on Friday.
Due to the uncertainty in the global financial market, safe haven assets, such as government debt, precious metals, and the Japanese Yen, have gained a lot of interest. The US 10-year bond debt yield declined to 1.492% in the early Asian trading session today. On Friday, it tumbled to as low as 1.406%, nearing the record low of 1.381% marked in July 2012.
However, the yen may spring an exception as the Japanese currency is on course to weaken after a sharp spike up on Friday. This is due to warnings from Japanese government officials on Monday that they may intervene in the currency market to stabilize the yen. After the shocking result of the British Referendum, the Yen had fallen below 100.000 threshold before recovering to 101.816. Possible measures to be applied in the event of an intervention, are being discussed between the Finance Minister and BOJ’s Deputy Governor.
On June 27, amid concerns over decreasing demand resulting from the fear of recession in UK and EU, energy markets are under downward pressure. Oil prices extended the sharp fall since Friday, as the West Texas Immediate reached a low at $47.12/barrel, down a half dollar from the last settlement.
GBPAUD opened this week with a small gap-down, continuing to extend the losses since Friday, as the sterling is losing ground across the board. Currently, the pair is lingering around 1.80527, showing signs of a minor consolidation in the Asian trading session. GBPAUD witnessed some correction last Friday but now has fallen back below the lower trend line. ADX (14) stays high with DI- far from DI+, indicating that the down-move may resume soon.
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On Friday, the pair witnessed a sharp spike by the Japanese yen, which led EURJPY to decline from a high of 122.022 and crash to a record low of 109.480, which is the lowest since December 2012. A little recovery is not enough to support the RSI (14) indicator past the 50 threshold. The RSI is heading down, towards the oversold territory one more time. The bear is still overwhelming. More declines are expected as the trend indicator is signaling a short position on this currency pair.
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USDCHF has been moving in an unclear fashion around the 50.0% level of Fibonacci retracement for a while, after testing a high of 0.98020 on Friday, failing to break through the 61.8% of Fibonacci retracement. A higher-than-average reading of RSI (14) shows that the bullish power is relatively strong. Hence, the pair is supposed to take the pressure from the two SMAs below to inch up a little, there after resuming its recent downtrend.
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Silver has retreated slightly from around 18.309 to 17.671 with RSI hovering around level 60 and pointing down. The commodity has just escaped from overbought territory. ADX is now at 36, combined with DI- (red line) beginning to turn its head up towards DI+ (green line), indicating a strengthening bearish move. The price is anticipated to hit the support level at 17.075 soon.
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Brent crude price is lingering around the area of Fibonacci 23.6% at $48.85 per barrel. With the RSI (14) remaining under 50 and the pressure from two moving averages moving above the prices, the commodity is expected to retest the low of $48.20 before breaking out of the currently shrinking range.
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FTSE has plunged strongly from the resistance level at 6383.05 to a four-month low of 5722.38 after Britain voted to leave the European Union. The index is now hovering around the price area of 6055.05, under pressure from the 10-day and 50-day EMA. RSI is at level 43 and pointing down, suggesting a bearish market formation. The price is expected to retest the support level at around 5889.87, created on September 28. 2015.
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