Australian Dollar
Expected Range 0.7350 – 0.7530
The Australian dollar edged marginally lower through the close of trade on Tuesday edging back toward 0.7450 having rallied to touch overnight highs at 0.7512. Buoyed a renewed appetite for risk the AUD advanced to briefly breach the psychological 0.75 cent handle following a string of opinion polls that suggested Britons would defeat the Brexit referendum. The Aussie then suffered a sharp selloff plunging 60 points as updated polls showed the gap between those opting to remain in and those pushing to leave the EU has again narrowed. Brexit speculation continues to drive direction and sentiment. We anticipate the AUD will continue to follow risk trends in the lead up to tomorrows vote where in a definitive risk on or risk off platform will be established.
New Zealand Dollar
Expected Range 0.7080 – 0.7180
The New Zealand dollar crept marginally higher through trade on Tuesday buoyed by a renewed appetite for risk and demand for return on higher yielding assets. The Kiwi has been an attractive higher yielding carry trade option through recent weeks as the RBNZ battles between stimulating exports and combating burgeoning Auckland property prices. Having touched intraday highs at 0.7169 the NZD moved lower into the close as investors looked to reposition themselves and absorb some profits ahead of tomorrow’s Brexit referendum. With such an important event on the calendar we expect direction through trade today will be governed by risk flows.
Great British Pound
Expected Range 1.9425 – 1.9925
The Great British Pound retraced recent gains through trade on Tuesday edging back below 6 month highs and touched intraday lows at 1.4617. Investors looked to dump GBP holdings as opinion polls released by IG suggested the gap between those hoping to remain within the EU and those proponents pushing a ‘leave’ vote had narrowed. Having found renewed support through suggestions the ‘Stay’ campaign was gathering momentum the latest poll shows just how divided the wider public is. With the latest polls suggest the gap had closed to just 1 percentage point investors will be keenly attuned to any additional polling that proffers an insight into the outcome of tomorrow’s vote.
Majors
Expected Range N/A
The Greenback found support through trade on Tuesday advancing against a basket of major currency counterparts. Investors looked to buy USD having sold down Pound and Euro holdings following updated opinion polls that showed the gap between Britons opting to remain within the EU and those pushing to leave had again narrowed. Brexit chatter continues to dominate wider direction and the Euro fell through 1.1300 touching intraday lows at 1.1243 after ECB President Mario Draghi confirmed the Bank was ready to act with all instruments if necessary. The comments suggest further monetary stimulus is on the table and investors were spooked into dumping the 19 nation combined unit. The Greenback also found renewed strength when valued against its traditionally safe haven counterpart, the Japanese Yen. The USD bounced through 104 touching session highs at 105.02. Profit taking and positioning ahead of the Brexit saw investors sell down JPY holdings with further Greenback strength expected should fears continue to ease. Attentions now turn to Thursday’s vote with direction in the lead up to be driven by positioning, profit taking and result expectations.